Retail investors accounted for about 20% of the volume of U.S. equity transactions in the third quarter of 2025, which corresponds to their second highest level ever recorded. Meanwhile, the entire crypto market is moving in the opposite direction, with increased dominance of institutional capital as retail participation declines.
This contrast between equities and digital assets raises serious questions regarding market maturity, their volatility, and the future trajectory of these asset classes as we approach 2026.
Stocks for retail investors, crypto for institutions
This resurgence of activity among retail investors marks a major change in the structure of the stock market. According to figures reported by the Kobeissi Letter, individual investors reached their second historical market share in the third quarter of 2025, approaching the peak of the 'meme stocks' phenomenon from the first quarter of 2021.
Before 2020, the average retail participation hovered around 15% for several years. This increase to 20% today is therefore significant.
Retail participation has now surpassed the main institutional categories. Traditional mutual funds and classic hedge funds each represented only 15% of trading volume in the last quarter, half of their share in 2015. Additionally, all categories of funds, including quantitative ones, collectively accounted for only 31% in the third quarter.
"Retail investors are taking control of the market at a historic pace," can be read in the post from the Kobeissi Letter.
In parallel, the entire crypto market shows today an inverse dynamic to that of the stock market. While retail investors fueled previous bull runs, the year 2025 marked a clear shift in favor of institutional investors. In a recent note, JPMorgan also noted a decline in retail participation in the market. According to the bank:
"Crypto is gradually moving away from a venture capital-type ecosystem to become a more classic macro asset class, driven by institutional liquidity rather than retail speculation."
It is interesting to note that the correction recorded across the entire crypto market has led to lower demand for ETFs and places increased pressure on companies in the digital treasury (DAT) sector. However, analysts clarify that buying appetite has simply slowed without being completely extinguished.
This evolution translates into an increasingly marked gap between retail and institutional investors. Data from CryptoQuant shows that Bitcoin holdings by institutional players continued to grow in 2025, while retail investors are now heading in the opposite direction.
Market transformations are not limited to participation rates alone. A strong presence of retail investors in the stock market generally signals an environment dominated by sentiment, where price fluctuations are increasingly explained by short-term narratives, a continuation of momentum, and collective behaviors. When retail investors lead the dance, the market also becomes more reactive.
Conversely, analysts estimate that institutional dominance over crypto reflects a sign of a more mature market, promised greater stability. Institutional input strengthens liquidity, stabilizes price, and, in theory, reduces volatility. Large institutional players generally invest with a long-term perspective and possess superior risk management capacity, factors likely to promote more regular price growth rather than uncontrolled surges.
Nevertheless, expectations around crypto remain cautious. Barclays anticipates a difficult year for crypto in 2026: in the absence of major catalysts, structural growth appears limited according to the bank. And while the political context in the United States has shown to be more favorable to crypto this year, Barclays believes that this turning point is already factored into the market price.
The divergence, now evident, between stocks and crypto thus highlights a structural transformation in the way risk is expressed across markets. The rise of retail investors makes the stock market more dependent on sentiment and herd behavior, while the institutional anchoring that is gaining traction in crypto encourages maturity but with a more tempered dynamism. It remains difficult to know at the dawn of 2026 whether this gap will be sustainable or will have been just a parenthesis.
The moral of the story: Institutions never leave without their share of the pie.
