Investors everywhere look to the charts to
forecast the next market move, but they’re often looking in the wrong place. You’re looking
in the wrong place. And that’s because big money is moving behind closed doors through the
over-the-counter or OTC market. And that’s why when we saw a recently published report revealing
the activity of OTC traders, we knew we had to cover it. So today we’ll break down this report
for you in simple terms and tell you what it could mean for the crypto market. My name is Nick.
Stay tuned. Before we begin, you need to know that I am not a financial advisor and nothing in this
video should be considered financial or investment advice. This video is purely educational and
intended to inform you about crypto’s OTC market. So, if that sounds good to you, sounds good
to me. Punch those like and subscribe buttons, smash that notification bell, and let’s get
into it. Now, the report we’ll be summarizing for you today is titled quote OTC market
review report. It was written by Wintermute, one of crypto’s leading market makers and OTC
dealers. We’ll be summarizing the highlights right here in this video and we’ll leave a link
to the full report in the description for you to come back and read later. Wintermute begins by
noting that its OTC trading data for the first half of 2025 found several trends. Notably, retail
and institutional investors are diverging in their market approaches. institutions continue to focus
on major cryptos like Bitcoin and Ethereum while retail is shifting toward altcoins. And although
memecoin activity has faded, the number of new tokens traded has doubled. And this makes sense
when you consider that we’re finally starting to see some activity in the altcoin market. Speaking
of which, if you’re looking to trade crypto, then you better check out the Coin Bureau deals
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advantage of them ASAP using the link down below or this QR code. Back to the vid. Now, the report
also highlights a 412% jump in OTC options trading compared to the first half of 2024. Moreover, the
number of traded contracts for difference or CFDs has doubled. Now, for those unaware, a CFD is a
financial contract that bets on the price of an asset without actually owning the asset itself.
It’s kind of like a perpetual futures contract. Anyway, the report highlights growing engagement
with tokenization platforms, including a shift towards tokenized equity. Notably, Wintermute
recorded a 32% increase yearon-year in OTC volumes from Tradfi institutions for these
tokenized RWAs. The report also notes that trading volumes also spiked in early 2025, but
normalized in Q2 as macro catalysts subsided. Activity was also increasingly concentrated
around established assets like BTC and ETH and is consolidating around specific themes. The
report then points to the improving regulatory landscape with regulatory clarity coming from the
EU markets in crypto assets bill or Micah and the Genius Act in the US. The latter of which was
just signed into law by President Trump. Next, Wintermute reveals that its OTC spot volumes
in the first half of 2025 outperformed overall exchange volumes by 2.4 times. Specifically,
spot trading on centralized exchanges grew by 7%. While OTC volumes rose by 18%, indicating
that institutional investors prefer executing large trades outside of exchanges. The
reporter then turns to OTC derivatives, which have seen major growth in the first half of
this year, largely driven by institutional demand. CFDs continued their momentum from last year
with the number of tradable underlying assets rising from 15 to 34 reflecting growing interest
in capital efficient exposure to crypto without directly owning those underlying assets. Options
trading saw little change in asset variety. BTC and ETH still made up 96% of OTC volumes,
but annualized trading volume have soared 230% from 2024 and 412% compared to the first half of
2024. And this surge is driven by investors using options to hedge risk and also to generate some
yield. Now, the report also notes that CFDs are expanding into altcoins. ETH has already nearly
doubled its share of CFD volumes since 2024, while XRP and Soul activity has dropped. Still, overall,
Altcoin CFD volumes have tripled with institutions showing a clear interest in cryptos with a market
cap below $1 billion. Okay, the next part of the report highlights the growing gap between
institutional and retail investors. In 2024, both were rotating into smaller, riskier projects.
But this wasn’t the case for the first half of 2025. Institutions stuck with larger cryptos
while retail pushed deeper into smaller altcoins. The report notes a few reasons for this. First,
institutions face a few constraints like limited altcoin liquidity and mandates that keep them
from taking on too much risk. At the same time, BTC and ETH have regained appeal with institutions
driven by heavy accumulation from governments like El Salvador and corporations like Strategy.
Meanwhile, retail investors free from the same restrictions have been rotating into altcoin
narratives, including the likes of decentralized AI, DeFi, Deepen, and others. Wintermute notes
that quote, “We believe this change reflects a shift in risk appetites and is an early sign of
the market maturing with institutions sticking with proven majors while retail explores the
longer tale of innovation. To illustrate this split, the report includes a chart showing OTC
spot volumes changes in major cryptos. From 2023 to 2024, institutional OTC shares dropped
from 74% to 67% and retail shares from 55% to 46%. Between 2024 and 2025, though, institutional
allocation didn’t budge, while retail fell further to 37%. The report then looks at trading momentum.
After a strong 2024, 2025 began with heightened optimism as BTC broke through $100,000. The report
attributes 2024’s Q4 rally to the US elections, but says momentum steadied after President Trump’s
inauguration. By spring, enthusiasm had waned, leading to reduced price action and volatility.
The report also notes that unlike the 2024 hype around memecoins and AI agents, there wasn’t
really a dominant theme in the first half of 2025, meaning that broader market sentiment stayed
relatively muted. The report adds that quote, “With BTC hovering near all-time highs, the
market remains in a wait and see mode, boyed by headlines, but lacking a unifying catalyst.” Well,
safe to say that since this report was published, investors have decided that they’ve waited way
too long because altcoin season is flying. Am I right? In any case, this trend was reflected
in 2025 OTC flows where institutions frontloaded activity in the first few months before easing
off while retail has filled the void since by rotating into altcoins. Something which has become
more obvious in spot markets in recent weeks. Next, Wintermute explains that in 2025, OTC spot
flows have moved towards institutions and retail brokers, which is evidence of crypto becoming
more mainstream. Institutional adoption has grown, supported by increased regulatory clarity, while
mainstream advisory is pushing to allocate a higher share of portfolios to crypto, which is
driving retail participation. Meanwhile, crypton natives are more cautious than in early 2024 due
to a lack of standout speculative narratives. Instead, investors are more focused on regulatory
clarity and cryptos growing maturity and adoption as an asset class. Okay, the next part of the
report takes a closer look at trading activity in different crypto sectors. That’s because across
all investor types, retail, institutional, trady, capital has been consolidating around nine
specific sectors. The report ranks these nine sectors by their share of OTC spot volumes with
one being the largest and nine being the smallest. In order of size, these are as follows: currency
networks including Bitcoin. generalpurpose blockchain networks including Ethereum, stable
coin protocols, memes, decentralized finance or DeFi, blockchain utility and tools, media arts
and entertainment, centralized finance or CFI, and decentralized physical infrastructure or deepen.
Anyway, throughout 2024 and the first half of 2025, the rank of each sector stayed the same, but
capital became more concentrated in three areas. currency networks, generalpurpose blockchain
networks, and blockchain utility and tools. Elsewhere, smaller sectors like Deepen and CFI saw
the largest declines. Notably, retail investors move to emerging narratives, which apparently
includes stable coins. Institutional investors have favored crypto infrastructure and a whopping
96% of Trady Capital has stayed with BTC layer 1 cryptos like ETH and stable coin protocols. In
fact, the only shift in rankings in 2025 was stable coins, which overtook memecoins to become
one of the top three sectors. The report notes that between 2024 and 2025, both institutions and
retail pulled back from smaller narratives like Deepen and DeFi, but they diverged into two areas,
stable coins and media, arts, and entertainment, which saw more retail trading and reduced activity
from institutions. The report adds that stable coins gained traction in Q2, likely due to the
then pending stable coin regulations in the US. Conversely, media, arts, and entertainment is
rebounding after overheating last cycle. Retail is slowly returning while institutions continue to
move further away. The other divergence is in CFI, which has seen the opposite play out. More trading
activity from institutions and less trading activity from retail. The report notes that quote
the institutional bid has been driven primarily by names like BNB and Crow. The report then asks a
question I’m sure many of you are also wondering. What about memecoins? Well, after dominating in
2024, memecoin activity dropped in 2025. Flows have shifted from legacy names like Dogecoin and
she enu to newer tokens like Bonk, Dog with Hat, and Popcat, which have grown their trading
share from 0.7% to 5.3%. But more interestingly, investor behavior has shifted. Institutions are
sticking to a smaller range of meme coins, while retail investors have more than doubled the amount
of meme coins they’re willing to trade. That said, though, overall spot OTC memecoin volumes are
down. Annualized activity in 2025 has dropped 29% from 2024 and 17% compared to the first half of
2024. As legacy memes like Doge or SHIB continue to lose dominance to memes like Bonk, Wiff,
and Popcat, OTC meme trading has become more fragmented. The report adds that quote, “This is
evidenced by the share of smaller longtail meme coins, rising from 0.7% to 16.1% of total flow.”
Unsurprisingly, this memecoin expansion was almost entirely driven by retail with 23 memes now being
traded OTC. Next, the report analyzes different subsectors in crypto to see what’s driving the
trading activity in each narrative. In their words, quote, “This granular approach allows us to
later zoom out and identify more structural trends across both existing and emerging narratives.”
The report then reveals which subsectors have seen an uptrend or downtrend in OTC activity.
In the blockchain utilities and tools sector, the subsectors that have seen the uptrend are
interoperability cryptos and scalability cryptos. Meanwhile, the data and analytics providers are
the only sub- sector within the utilities and tools narrative that reportedly saw a downtrend.
In the DeFi narrative, three subsectors were in an uptrend and none were in a downtrend. These
growing sub- sectors include asset origination and issuance cryptos, defy infrastructure and data and
managed yield services. In the deeper narrative, one sub sector grew while another declined. The
area that grew was computation while storage cryptos were in a downtrend. As for the media,
arts and entertainment sector, unfortunately, no subsectors experienced an uptrend, but the
metaverse subsector saw a downtrend, which isn’t too surprising all things considered. Now, in
the final part of the report, Wintermute takes a reflective look back to its predictions for 2025.
All in all, there were nine predictions made. Six predictions turned out to be accurate. Two were
partly correct and just one was completely wrong. Prediction one was that the US would create a
strategic Bitcoin reserve and that China, the UAE, and Europe would be forced to follow. Wintermute
claims it got this prediction right, but uh we’re not so convinced. Obviously, the US has created
a Bitcoin reserve and more recently Pakistan announced plans to follow suit. But as for China,
there’s only speculation and there’s very little evidence, if any, of the UAE or Europe creating
strategic Bitcoin reserves of their own. Anyway, the second prediction was that a listed company
would issue debt or shares to accumulate ETH, which was bang on. Several firms have done just
that in 2025. These include Blockchain Technology Consensus Solutions or BTCS now holding over
31,000 ETH, Shar Link Gaming now with over 280,000 ETH, and Bitmine Immersion holding 300,000 ETH.
Wintermute’s third prediction also hit the mark. Company dividends, acquisitions, or mergers would
be settled using stable coins. Back in March, MGX Fund Management, which is backed by the
Abu Dhabi government, completed a $2 billion investment in Binance, and this was the largest
ever investment in a crypto company and was settled using the USD1 stable coin. The fourth
prediction was one that came only part true, which was that a core asset manager would launch
a memecoin ETF with Doge being a strong contender. Well, although multiple asset managers have
filed for a spot Doge ETF, none have been approved as of yet, the SEC has until October to
make a final decision. The fifth prediction was one that Wintermute got absolutely wrong, which
was that a member of the Fang index would launch its own token or major exchange. Now, for those
unaware, F A N G stands for Facebook, now Meta, Amazon, Apple, Netflix, and Google, which is
now Alphabet. Anywh who, while companies are now exploring tokenized equity, no fang companies
have jumped on board, at least not yet. However, the report states that quote, “While admittedly
more in the moonshot category, we view this as the natural next step in the evolution of tokenized
fractionalization.” Just imagine the potential gains if that were to happen. The sixth prediction
was only half right. a quote systemically important bank would offer direct spot crypto
trading to clients. If we’re not mistaken though, Standard Charted’s most recent announcement that
it would start offering Bitcoin and Ethereum trading to clients means that this prediction came
true after all, as it’s technically considered to be a systemically important bank. The seventh
prediction was spoton as well. Dispersion trades, which are basically bets on price differences
between different cryptos, became more popular, boosting demand for structured products.
Activity in Bitcoin options has surged, a clear sign of market maturity. Since the start
of the year, open interest in BTC options has nearly tripled from 11.6 billion to $31.3 billion.
And this shows rising institutional activity and more use of volatility strategies setting
the stage for advanced positioning in the future. The eighth prediction was also correct
and nonem layer 1 and layer 2 cryptos gained market share but Ethereum remained dominant. Key
metrics like TVL onchain volume, daily users, and market share have remained fairly steady with
no real threats to Ethereum’s dominance. Though some would say this is up for debate. And finally,
the ninth prediction was also correct, which was that dexes will see strong gains in market
share if abstraction products become more widely adopted. Dexes have continued to capture market
share in the spot markets, hosting 80% of the total spot trading volumes, which is up from 11%
in 2024 and 10% from the first half of last year. And this growth reflects a deeper liquidity and
rise in user comfort thanks to abstraction tools that simplify onchain interactions. The report
notes that if this trend continues, Dex’s market share will likely keep on rising. And with that
folks, we’ve reached the end of this report. And I’ll remind you that you can find the full thing
in the description below. For now though, there’s just one more question remaining. What does all
of this mean for the crypto market? Well, if there’s one thing that’s clear from this report,
it’s that institutional and traditional investors continue to be interested in major cryptos like
Bitcoin and Ethereum, while retail investors are the ones leading the charge into the broader
crypto market, even with cryptos being traded OTC. What you probably already know is that OTC
trades allow large investors to buy or sell huge amounts of crypto with minimal impact on the wider
market, if any. What you might not know though is that OTC trades actually help support overall
market liquidity since OTC desks connect traders that often trade amounts far exceeding the daily
trading volumes on exchanges. Put differently, OTC markets arguably help keep the wheels in
motion. So, a naturally stronger OTC market means a stronger overall crypto market. And as we’ve
learned, the OTC market seems to be booming. That said, since this report was published, dynamics
in the crypto market have shifted somewhat and for multiple reasons. On the one hand, the altcoin
market is finally showing signs of life with many cryptos finally getting the long overdue rally
that investors everywhere have been praying for. On the other hand, the US has taken greater steps
towards regulatory clarity with President Trump signing the Genius Act into law on the 18th
of July, providing some much needed clarity on stable coins. The next big step is the Clarity
Act. While the Genius Act targets stable coins, the Clarity Act focuses on market structure,
which some argue is even more important. Among other things, the Clarity Act aims to make digital
commodities on mature blockchains exempt from the outdated Securities Act of 1933 and hands market
oversight from the SEC over to the CFTC. Notably, the Clarity Act has already passed the House and
is headed to the Senate along with Representative Tom Emma’s bill to block the Fed from launching
a dystopian style central bank digital currency or CBDC. And you can learn more about the Clarity
Act right over here. Now, the point is that this will attract even more market institutional and
traditional investors, meaning huge amounts of capital flowing into the crypto market. And given
that cryptos are already starting to rally like crazy, this suggests that many altcoins could
rally to new all-time highs, even higher than many are expecting. So, strap in folks because if
you think market sentiment is good now, then well, you ain’t seen nothing yet. Okay, if you enjoyed
that video, you’ll love our latest one right over here. And if you’re not subscribed to the channel
yet, well, you can do that right over here. That’s me next signing off. Thank you guys very much for
watching and I will see you in the next video.
