Retail investors accounted for approximately 20% of U.S. stock trading volume in Q3 2025, the second highest level ever. At the same time, the crypto market shows the opposite: institutional capital dominates while retail participation declines.
This difference between stocks and digital assets raises important questions about market maturity, volatility, and the future direction of both asset classes as 2026 approaches.
Stocks are becoming retail while crypto is becoming institutional.
The increase in activity by retail investors means a significant change in the structure of the stock market. According to data shared by The Kobeissi Letter, individual investors reached their second-largest share of trading ever in Q3 2025, nearly as high as during the meme stock hype in Q1 2021.
Before 2020, the average retail participation had hovered around 15% for years. Therefore, the current rate of 20% is striking.
Retail participation is now greater than individual institutional categories. Both long-only investment funds and traditional hedge funds each accounted for about 15% of trading volume in the last quarter – half of their share in 2015. Additionally, all fund categories combined, including quants, accounted for only 31% in Q3.
"Retail investors are taking over the market at a historic pace," said The Kobeissi Letter.
Meanwhile, the cryptocurrency market now shows the opposite of the stock market. Where retail investors previously drove bull runs, there was a clear shift towards institutional dominance in 2025. JPMorgan pointed out in a recent report that retail participation in the market has decreased. According to the bank:
"Crypto is transforming from a venture capital-like ecosystem to a standard tradable macro asset class supported by institutional liquidity rather than retail speculation."
It is important to know that the decline in the cryptocurrency market has led to less demand for exchange-traded funds (ETFs) and a lot of pressure on companies active with digital asset treasury (DAT). Nevertheless, analysts indicate that buying interest has slowed down but has not disappeared.
This dynamic is visible in the growing gap between retail and institutional behavior. According to CryptoQuant data, institutional Bitcoin holders continued to expand their positions in 2025, while retail investors went in the opposite direction.
The changes in the market are more important than just participation rates. Much retail activity in the stock market usually creates an environment where sentiment reigns, price fluctuations occur faster due to short narratives, momentum, and group behavior. When individual investors dominate, markets often react more violently.
On the other hand, crypto analysts see institutional dominance as a sign of growing maturity and future stability. More institutional capital leads to greater liquidity, more stable prices, and (in theory) less volatility. Large institutions often have a longer investment horizon and better risk management, which can lead to steadier price increases instead of large spikes.
Nevertheless, the expectations for crypto remain cautious. Barclays expects 2026 to be a weak year for crypto and states that structural growth seems limited if there are no major drivers. Although the U.S. political climate has become more crypto-positive this year, Barclays believes the market has already priced in this development.
The differences between stocks and crypto therefore highlight a structural change in how risk manifests in different markets. The rising retail participation makes stock trading more sentiment-sensitive, while the institutional rise in crypto indicates maturity but less strong momentum. Whether these differences are temporary or signify a lasting change as 2026 approaches remains to be seen.
