Crypto Market Loses Luster for Retail Traders as Institutions Dominate

Institutional giants now dominate market flows, potentially dampening the wild, rapid price swings that retail speculators crave.

In the first quarter, Coinbase’s consumer volume dropped 35% sequentially, while activity on retail-favored networks like Base continues to shrink.

Languid markets, underwater altcoin portfolios, and growing politicization have left some veteran hobbyists questioning crypto's long-term future.

Crypto’s chaotic, meme-driven energy once made it a playground for digital adrenaline junkies. But as the market matures, everyday retail traders who braved the trenches are finding the asset class increasingly boring.

Cole, a 34-year-old crypto trader based in the U.S., told Decrypt that he’s seen an increasing number of peers within his Discord-based trading group complain and vent frustrations about how price action has gotten less fun to trade as time has progressed.

“It’s been shitty for a lot longer than the last few months,” he said. “Most of the people I know who are trading crypto still are dabbling heavily in stocks as well, or real-world assets, [...] and we’re having better success.”

The frustration isn’t isolated. As Wall Street giants increasingly dominate digital asset flows, the wild volatility that once defined the crypto market has leveled out. Amid muted market activity and upside-down portfolios, everyday retail traders are quietly pulling back—shifting focus to traditional assets and altering the industry’s foundational base of hobbyists.

In some ways, the pullback from traders could stem from an interest in shiny objects. This is “so bad for the coins,” Frank Chaparro, head of content and special projects at crypto market maker GSR, said in a recent X post, highlighting a mobile price alert from crypto exchange Coinbase on silver’s latest, outsized swings.

The sentiment was echoed by Gerry O’Shea, head of global market insights at crypto asset manager Hashdex. He told Decrypt that individual traders are often drawn to volatility, and the crypto market has lost its luster in that respect as institutional investors have incrementally dominated the tape.

On top of that, retail traders have historically gravitated toward altcoins, which are prone to steeper drawdowns than Bitcoin. O’Shea said there are likely traders who expected large, outsized returns but are “still very much underwater.”

In the three months ended March 31, for example, consumer spot trading volume contracted 35% for Coinbase from the previous quarter to $36 billion. Over the same period, institutional spot trading volume declined just 6% to $202 billion.

More broadly, spot trading volumes across all exchanges have fallen roughly 30% over the past half-year, dropping to around $900 billion monthly from $1.3 trillion, Laurens Fraussen, a research analyst at crypto analytics firm Kaiko, told Decrypt.

“We’ve also noticed an aggressive decrease in volume in Korean markets in the past couple of months, and in Korea 85% of volume is altcoin-driven, which highlights once more the disinterest from retail,” he added in an email.

Muted memes and a crypto president

If wild price swings are attractive to consumers, then a mellow market for meme coins could partly explain the cooldown. Assets that trade on little more than vibes thrived in 2024; however, recent data indicates that this momentum has stalled on consumer-facing networks.

On Base—the Coinbase-incubated Ethereum layer-2 scaling network, which is extensively used by retail traders—daily user activity has significantly cooled. Over the past 180 days, active addresses have fallen 30% to 407,100, according to Token Terminal.

Google Trends data shows search interest for “buy crypto” reaching a peak in May 2021, reflecting widespread “FOMO” during the pandemic-era crypto boom. Within the past couple years, interest spiked again alongside President Donald Trump’s reelection on a pro-crypto platform.

The asset class has become increasingly politicized over time through former SEC Chair Gary Gensler’s industry crackdown to the subsequent activity associated with America’s first “crypto president.” That dynamic means that if someone is generally anti-Trump, then they may be less likely to touch crypto, Yat Siu, co-founder of crypto investment firm Animoca Brands, told Decrypt.

“The Trump brand and the America brand, where it sits now, has a direct impact on the popularity and the awareness and the interest in crypto,” he said. “These are new factors that we didn't have to think about.”

Cole, the crypto trader, has observed a shift among peers from long-term positional trading to taking profits quickly. He attributed that dynamic to a collapse in conviction, and a market that sometimes feels rigged, as some doubt if “crypto is even going to be here in the next few years.”

Still, some traders see opportunities. That includes Scott, a 37-year-old crypto trader based in the U.S., who told Decrypt that he’s been averaging down during the market dip, adding to an altcoin position that’s gone down significantly since he invested in December.