Wall Street Is deepening Its crypto grip and rewiring the market

Wall Street is increasingly leveraging crypto assets, fundamentally altering the market's underlying systems. According to a recent Wintermute report, hedge funds and asset managers now constitute 72% of spot trading volume on their over-the-counter desk in the first half of 2026, compared to 59% a year prior, even as overall crypto volumes declined. This shift highlights how Wall Street is now the primary liquidity source in the crypto market, tempering its inherent volatility.

The once retail-driven crypto market is transitioning towards institutionally driven structures. Professional traders are now determining market sentiment. Wintermute analysts note that this suggests crypto is entering a market dominated by large institutions, with capital concentration, increased derivatives usage, and burgeoning secondary market activity for tokenized assets.

This transformation isn't limited to Bitcoin and Ether. In fact, options trading volumes for altcoins on Wintermute's over-the-counter desk have more than tripled from the second half of the previous year, though liquidity remains concentrated among a select few tokens. Nonetheless, institutions have become more selective, favoring more liquid assets. The range of tokens traded by professional counterparts expanded by 24% over the past two years, while retail investors showed a 76% increase in the same period.

Wintermute's Alistair Byas-Perry, head of capital markets and investment for Europe, the Middle East, and Africa at 21shares AG, observes that asset managers and wealth managers are conducting more thorough due diligence compared to retail investors. This has contributed to an atypical crypto drawdown. While Bitcoin has declined about 50% since its peak above $126,000 last October, the drop has been gradual rather than the sharp declines seen in previous market corrections.

Despite subdued retail participation, some traders remain undeterred. Miami-based paramedic Adam Potamkin, for instance, recently purchased Bitcoin at a higher price, citing "Satoshi’s gift to the faithful" — volatility. He acknowledges that his conviction has been tested, and the world feels more unstable, yet he remains uncertain about valuing this asset.

Some investors speculate the market may be nearing a bottom, although few would confirm it. As Wintermute's Stephen Coltman points out, it is only with hindsight that one can determine if a market has truly bottomed, and the future remains uncertain.