Retail investors shifted decisively back into Bitcoin and Ether following the sharp crypto market crash in October, a move that further weighed on an already difficult year for altcoins.
According to digital asset market maker Wintermute, the large-scale liquidation event on October 10 triggered a clear change in retail behavior. Hopes for a sustained altcoin cycle faded as traders sought safety in the most liquid and established cryptocurrencies.
For several years leading up to 2025, retail participants had generally reduced exposure to Bitcoin and Ether in favor of higher-risk altcoins. However, that trend reversed last year. In its Digital Asset OTC Market 2025 report, Wintermute noted that the October crash represented a turning point, accelerating retail’s rotation back into major assets.
Market data shows that while retail traders were initially trimming positions in Bitcoin and Ether during the height of the liquidation, they quickly rebuilt exposure once the leverage flush concluded. Wintermute described this response as a defensive reaction, driven by concerns over contagion risk and the possibility of a broader bear market.
By year-end, retail positioning increasingly resembled institutional strategies, with investors favoring liquidity and balance-sheet resilience rather than speculative exposure. Wintermute characterized this shift as a “defensive consolidation,” marking a return to major cryptocurrencies.
Altcoin rallies fail to gain traction
The renewed focus on Bitcoin and Ether effectively sidelined any meaningful altcoin season during the cycle. Altcoins underperformed throughout 2025, as short-lived rallies struggled to gain momentum.
While new narratives continued to appear, Wintermute observed that few were able to sustain investor interest. On average, altcoin rallies lasted about 19 days in 2025, a sharp decline from roughly 60 days the year prior. This shortening reflected lower conviction and increasingly tactical trading behavior.
Between 2022 and 2024, altcoin trends often persisted for 45 to 60 days, supported by themes such as memecoins and artificial intelligence. In contrast, the median duration of altcoin rallies in 2025 fell to around 20 days, reinforcing the view that these moves were opportunistic trades rather than durable market trends.
Market sentiment stabilizes after October shock
Although altcoins have yet to show strong momentum heading into 2026, investor anxiety linked to the October crash has eased. Confidence has gradually returned as the market moves beyond the shock of the liquidation event.
Earlier this month, Matt Hougan, chief investment officer at Bitwise, said that the early-year rally reflects investors leaving the October 10 collapse behind.
Overall crypto market capitalization has climbed to its highest level so far this year. Since the start of January, total market value has increased by roughly 10%, or $300 billion, reaching approximately $3.34 trillion, according to data from CoinGecko.
