Institutions Drive Crypto Market Shift as Retail Traders Exit
The crypto market is undergoing a significant transformation as institutional investors increasingly take over from retail traders. According to Gracy Chen, CEO of Bitget, one of the largest exchanges by trading volume, this shift has led to a decline in liquidity for altcoins and a return to conditions seen in 2022.
The fact that institutions are becoming more selective in their investments is evident in data from Wintermute, which shows that institutional clients accounted for 72% of its spot over-the-counter flow in the first half of 2026. However, this selectivity has also led to a decrease in the number of tokens traded by these clients, with only a few coins, such as HYPE, showing significant growth.
The entry of institutions into the crypto market is also having a taming effect on Bitcoin's volatility, with its one-year annualised volatility dropping to 42% in early August. This has led to a decline in retail trading activity, with many traders moving to other markets such as artificial intelligence and prediction.
Despite these trends, the industry continues to attract institutional investors, with banks like JPMorgan Chase using Ethereum blockchain for tokenized deposits and State Street Investment Management offering a tokenized private liquidity fund on Solana. As Gracy Chen notes, 'That's how we can survive the current bear market.'