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Retail investors will represent approximately 20% of US trading volume in the third quarter of 2025, the second highest level ever recorded. At the same time, the cryptocurrency market is seeing the opposite trend, with institutional capital dominating while retail participation is declining.
This dichotomy between stocks and digital assets raises important questions about market maturity, volatility and the future direction of both asset classes in 2026.
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Stocks become an individual investment while cryptocurrencies become institutional
The increase in the activity of retail investors represents a major change in the structure of the stock market. According to data shared by Message Copisi, retail investors reached their second highest trading participation in history during the third quarter of 2025, approaching the peak of the stock meme race in the first quarter of 2021.
Individual participation before 2020 has averaged around 15% for several years. So, that makes the current 20% very important.
Individual involvement extends beyond individual institutional departments. Both long-term mutual funds and traditional hedge funds accounted for about 15% of trading volume last quarter, half of their share in 2015. Also, all fund classes together, including quants, accounted for just 31% in Q3.
Retail investors are taking the market at a historic pace, Kobesi’s letter said.
In contrast, today’s cryptocurrency market shows the opposite composition of the stock market. Although retail investors fueled previous rallies, 2025 saw a clear shift towards institutional dominance. In its recent note, JP Morgan pointed out Highlight it To the decrease of the participation of individuals in the market. According to the bank,
The cryptocurrency market is moving away from a venture capital environment and becoming a traditional trading asset class supported by institutional liquidity rather than individual speculation.
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It should be noted that the decline in the digital currency market has reduced the demand for ETFs and put significant pressure on digital asset treasury (DAT) companies. However, analysts indicate that buying interest has slowed rather than disappeared.
This dynamic reflects the growing gap between the behavior of individual investors and that of institutions. According to Cryptoquant data, institutions will continue to increase their Bitcoin activities throughout 2025, while individual investors tend in the opposite direction.
Why does this contrast matter?
The importance of market changes goes beyond participation rates. The increase in individual activity in the stock markets typically indicates an environment in which short-term narratives, momentum hunting and crowd actions are increasingly influencing price action. When trading is dominated by individual investors, markets tend to be more interactive.
Cryptocurrency analysts, on the other hand, see institutional dominance as a sign of growing maturity and future stability. The more institutional capital, the more liquidity, the more stable prices are, and the lower volatility (in theory). Larger institutions typically have longer investment horizons and better risk management, which can allow for more sustainable price growth rather than extreme fluctuations.
However, the outlook for cryptocurrencies remains cautious. Barclays expects 2026 to be a negative year for the sector, noting that in the absence of major catalysts, structural growth appears limited. Barclays stated that although the political climate in the United States has become more positive towards digital currencies this year, this change has already been priced into the market.
The gap between stocks and cryptocurrencies thus highlights a structural change in the way risk is expressed in the markets. While the increase in retail participation makes stock trading more emotionally connected, the growing institutional base in cryptocurrencies indicates greater maturity, but with muted momentum. It is not clear whether these differences are temporary or represent a permanent change as 2026 approaches.
