Retail investors accounted for approximately 20% of the trading volume in U.S. stocks in Q3 2025, marking the second-highest level ever recorded. Meanwhile, the crypto market exhibited the opposite trend, with institutional capital dominating the market while retail investor participation decreased.
This difference between the stock market and digital assets leads to important questions about growth, volatility, and the direction of both types of assets as 2026 approaches.
Stocks have become a retail market, while crypto is shifting towards institutions.
The increase in activity from retail investors represents a significant change in the structure of the stock market. According to data from the Kobeissi Letter, individual investors had the second-highest trading share in history in the third quarter of 2025, nearing the peak during the memestock period in the first quarter of 2021.
Before 2020, the average proportion of retail investors was around 15% for several years. Therefore, the current figure of 20% is considered quite significant.
The participation of retail investors has outpaced each category of institutions, with long-term investment funds and traditional hedge funds each accounting for about 15% of trading volume in the last quarter, or just half compared to 2015. Additionally, all types of funds, including quant funds, combined only make up 31% in this third quarter.
According to the Kobeissi Letter, retail investors are taking on a major role in the market at a historic speed.
At the same time, the crypto market shows a different structure than the stock market. Even though retail investors have historically been a driving force during bull cycles, 2025 has seen a clear shift towards institutions. Moreover, JPMorgan noted that the participation rate of retail investors has decreased, according to bank data.
The crypto market is beginning to shift from a venture capital-like ecosystem to a more broadly tradable macroeconomic asset, supported by institutional liquidity rather than retail speculation.
It should be noted that the market correction in crypto has led to a decrease in demand for ETF funds, putting significant pressure on digital asset management companies (DAT). However, analysts indicate that the interest in buying has slowed down significantly rather than completely disappeared.
This situation reflects the growing gap between retail investors and institutions. Data from CryptoQuant indicates that institutional holdings of Bitcoin continue to expand throughout 2025, while retail investors are moving in the opposite direction.
Moreover, the changes in the market have deeper implications than just the level of investment participation. High activity from retail investors in the stock market often reflects a situation where prices are influenced by investor emotions, short-term stories, price-chasing strategies, and crowd behavior. When retail individuals dominate trading volume, the market tends to respond to new factors more quickly.
Nonetheless, crypto analysts believe that the increasing dominance of institutions in the market is a sign of maturity and stability in the future. As institutional capital increases, it leads to deeper liquidity, more stable prices, and theoretically less volatility. Large institutions generally have longer investment horizons and better risk management, which may allow prices to grow steadily instead of experiencing extreme volatility.
Nevertheless, expectations for crypto must remain cautious. Barclays predicts that 2026 will be a year of slowdown for the crypto market, and in the absence of key stimulus factors, structural growth appears limited. Although the political climate in the United States has become more crypto-friendly this year, Barclays believes that this trend has already been reflected in market prices.
Thus, the difference between the stock market and crypto indicates a structural change in the nature of the risks expressed in each market. That is, as the increased participation of retail investors makes the stock market more emotionally driven, the growing institutional investor base in crypto reflects greater maturity. However, the momentum is not as strong as before, and soon we will see whether what is happening is merely temporary or a long-term transition as 2026 approaches.
