Wintermute Declares End of Crypto Bull Cycle – Key Forces Shaping 2026

In its detailed year-end analysis, notable over-the-counter (OTC) trading desk Wintermute has declared that the traditional four-year cryptocurrency cycle has come to an end. The firm notes a new market structure has emerged, where liquidity and investor positioning now significantly influence price movements in the crypto market.

Key Takeaways

Wintermute reports the end of the traditional four-year crypto cycle, citing liquidity and investor positioning.
2025 marked a shift towards a more institutionally supported digital asset class, moving away from speculation.
Trading patterns have increasingly deviated from established seasonal trends, leading to greater volatility and shorter altcoin rallies.
Institutional engagement remained strong despite subdued market conditions, with a notable increase in derivatives trading.
For recovery in 2026, the market may need broader ETF mandates, significant rallies in major cryptocurrencies, and renewed retail interest in crypto.

Crypto's Bull Cycle - Wintermute Overview

According to the data, 2025 represented a pivotal change in digital asset trading, indicating a shift from speculative-driven rises to a more institutionally supported market.

Wintermute's data highlights a notable decline in the traditional pattern where Bitcoin profits would rotate into Ethereum, advance to blue-chip assets, and finally spill over into altcoins.

Crypto's Bull Cycle - Data Insights

There has been a transformation in exchange-traded funds (ETFs) and digital asset treasury companies, which Wintermute describes as “walled gardens.” These entities are creating sustained demand for major-cap assets without effectively channeling capital into the wider market.

As retail interest shifts towards equities, 2025 has turned into a year where a select few major tokens have attracted the bulk of new investments, while many other assets have struggled to gain traction.

Crypto's Bull Cycle - Market Trends

Disruption of Traditional Market Patterns

Trading in 2025 exhibited a marked deviation from previous years, breaking the seasonal rhythms traditionally seen in the cryptocurrency market.

An early surge in optimism surrounding a pro-crypto U.S. administration swiftly gave way to disappointment as risk sentiment plummeted through the first quarter, influenced by fading interest in memecoins and AI narratives.

The announcement of tariffs by Trump on April 2 added further pressure to the markets, concentrating trading activity early in the year before a broad decline during spring and summer.

The anticipated year-end uptick seen in 2023 and 2024 failed to materialize, challenging long-held beliefs about the “Uptober” phenomenon and year-end rallies.

Wintermute's analysis suggests these movements were not genuine seasonal trends but were instead influenced by unique catalysts such as ETF approvals in 2023 and developments in the U.S. within 2024.

Market activity became increasingly volatile as macroeconomic factors gained influence, leading to erratic trading responses to news without lasting momentum.

In 2025, altcoin rallies shortened significantly, averaging only 19 days, a decrease from 61 days in the previous year.

Crypto's Bull Cycle - Volatility Trends

Trends such as memecoin launches, decentralized exchanges (DEXs), and speculative gaming initiated short-lived spikes of activities but failed to evolve into lasting market-wide upswings, mainly due to erratic macroeconomic conditions and overall market fatigue after the excesses of 2024.

Crypto's Bull Cycle - Market Activity Spikes

Increased Institutional Engagement Despite Low Returns

Despite gentle price movements in 2025, institutional players continued to show strong interest.

Wintermute reported a 23% year-over-year increase in institutional participation, which includes asset managers, crypto-native funds, and traditional financial entities.

Crypto's Bull Cycle - Institutional Growth

Engagement has become more significant, focusing on intentional trading strategies rather than mere exploratory actions.

The firm’s derivative data indicates that options activity more than doubled in the past year, with systematic yield and risk management strategies taking precedence over isolated directional trading.

By the fourth quarter, notional values from options had increased to 3.8 times the levels observed at the start of the year, with trade counts also doubling, signifying ongoing growth in both transaction size and occurrence.

Following the deleveraging event on October 10, which led to roughly $19 billion in liquidations within a single day, both institutional and retail investors returned to major assets.

Crypto's Bull Cycle - Liquidation Effects

Additionally, altcoin open interest dropped by 55%, falling from approximately $70 billion to $30 billion by mid-December as excessive leverage outside of Bitcoin and Ethereum was unwound.

Three Factors That May Enhance Recovery in 2026

Wintermute points to three potential scenarios that could help expand the market in 2026 beyond the current concentration on large-cap assets.

First, ETFs and Digital Asset Treasuries (DATs) will need to expand their scopes, with initial signs visible in recent ETF filings for Solana and XRP.

Second, substantial gains in Bitcoin or Ethereum could trigger wealth effects that positively influence the broader market, echoing patterns observed in 2024, although reliability on capital recycling remains uncertain.

Lastly, though deemed the least likely, a shift in retail investor interest back from equities and artificial intelligence themes towards cryptocurrency could bring in new capital inflows alongside stablecoin minting.

“While 2025 did not deliver the expected rally, it might signal the beginning of crypto's emergence as a more established asset class,” concludes Wintermute’s analysis.

Additional insights from Adler Asset Management affirm the ongoing trend of deleveraging, which is expected to extend into 2026. Adler highlighted a significant plunge in the Bitcoin Advanced Sentiment Index, which dropped from the High Bull zone of around 80% to 44.9%—below neutral at 50%—indicating a shift in market dynamics.

Crypto's Bull Cycle - Advanced Sentiment Analysis

The most significant liquidation event noted occurred on January 19, with over $205 million liquidated in a single hour as prices fell from $95,400 to $92,600 within a day.

The future of the market in 2026 rests on whether liquidity will expand beyond a few large-cap assets and understanding the necessary structural changes for navigating the crypto landscape after the cycle's conclusion.