The year 2025 was a tough one for many cryptocurrency investors. While Bitcoin followed its usual four-year cycle, the results weren’t what people expected. The price rally was weak and full of ups and downs. More importantly, there was no real “altcoin season” — that period when smaller cryptocurrencies also surge in value. But this isn’t just about a failed cycle. Data from platforms like CoinGlass and Wintermute shows that the crypto market itself is changing in deeper, more lasting ways.

One major change happened at the exchange level. In early 2025, the amount of Bitcoin held on centralized exchanges peaked at around 2.98 million BTC. By mid-November, that number dropped to about 2.54 million BTC — a 15% decrease. This wasn’t just short-term trading behavior; it showed a bigger shift toward self-custody, ETFs, and long-term holding. Fewer coins on exchanges mean less trading churn and more stable investor behavior.

At the same time, over-the-counter (OTC) crypto trading — where big players trade directly with each other instead of using public exchanges — grew by about 15% during the year. This means more institutional investors are getting involved in crypto, but they’re using more private, less visible ways to do it.

Having fewer coins on exchanges can help support prices during good times. But if the market turns negative, it also means there’s less liquidity — which can lead to sharper, faster price drops when people rush to sell.

Institutional investors were active in 2025 but played it safe. They bought Bitcoin early in the year and sold before new highs. Ethereum didn’t get much attention from them until it was already rising. Institutions focused more on short-term opportunities and safe trades rather than long-term bets. This kept prices stuck in a range instead of breaking out higher.

Retail investors — everyday people — took a step back from crypto in 2025. Instead, they chased other hot trends like AI, robotics, quantum computing, and space tech. These areas were delivering better returns and stole the spotlight from crypto as a high-risk, high-reward investment.

Wintermute’s data showed a major change in how people trade crypto. Instead of buying or selling directly, more traders started using complex strategies like structured trades and derivatives to manage their risk and capital efficiently. Most of this activity came from institutions and brokers rather than individual investors.

Derivatives — like futures and options — became the main way people traded crypto in 2025. CoinGlass reported about $85.7 trillion in crypto derivatives volume for the year, with daily turnover sometimes hitting $265 billion. That’s about ten times more than regular spot trading. Because of this, price moves were driven more by trader positions and funding rates than by simple supply and demand.

The way derivatives were used also changed. In earlier years, retail traders dominated with high-leverage bets. But in 2025, the mix shifted toward institutions using safer, more balanced strategies like hedging and volatility plays.

Regulations helped shape this shift too. In the U.S., new laws made it easier for derivatives to be traded on regulated platforms. Meanwhile, Europe added tighter controls under MiCA and MiFID rules, limiting leverage and access for smaller investors.

This regulatory clarity helped traditional markets like CME Group grow stronger. By 2025, CME became a leading venue for Bitcoin futures trading, often matching Binance with daily volumes of around $12 billion. Ethereum futures also grew on CME, averaging $6 billion per day compared to $9 billion on Binance. This showed that price discovery was now being led by institutional flows rather than retail hype.

Decentralized finance (DeFi) also made big progress in 2025, especially in derivatives trading. On-chain platforms like Hyperliquid and Aster improved their systems to be faster and more efficient. According to DefiLlama, decentralized perpetuals trading hit $12.09 trillion in cumulative volume by the end of 2025 — up from $4.1 trillion at the start of the year.

By the close of 2025, crypto had clearly evolved into a complex financial system with multiple layers: centralized exchanges, OTC desks, regulated derivatives markets, and decentralized protocols. As we move into 2026, these changes set the stage for a more mature and structured crypto market with clearer rules and behavior patterns.