The crypto market is splitting in two.

Institutional and retail investors are taking increasingly different paths, with institutional players anchoring themselves in bitcoin BTC and Ethereum’s ether ETH while retail investors pour into altcoins and memecoins, according to a mid-year report from crypto trading firm Wintermute.

Analyzing over-the-counter spot trading volumes, institutional trading volumes with the two largest tokens held steady at 67%, likely backed by ETF inflows and structured accumulation vehicles, the report said. Meanwhile, retail investors dropped their BTC and ETH exposure from 46% to 37%, shifting capital toward newer, more speculative tokens.

«This divergence isn’t a temporary thing; It’s the sign that we are experiencing a more mature, sophisticated and specialized crypto market,» said Evgeny Gaevoy, CEO and founder of Wintermute.

«Investors are no longer chasing the same trend,» he added. «Institutions are treating crypto as a macro asset, while retail traders continue to gravitate to innovation.»

Overall, traditional finance (TradFi) firms were the fastest-growing cohort in OTC trading volumes, growing 32% year-over-year. That growth was being fueled by regulatory developments like the U.S. GENIUS Act and the EU’s ongoing MiCA rollout, which have given larger firms more confidence to participate, the report said.

Retail brokers also saw strong activity, with a 21% rise in volume over the same period. Meanwhile, crypto-native firms dialed back, down 5%.

OTC options volume jumped 412% compared to the first half of 2024, as institutions embraced derivatives for hedging and yield generation, the report noted. Meanwhile, Contracts for Difference (CFDs) doubled in variety, offering access to less liquid tokens in a more capital-efficient way.

Wintermute said its own OTC desk saw spot trading volumes grow at more than twice the pace of centralized exchanges, signaling a shift toward more discreet, large-volume trading favored by traditional finance.

The firm noted that memecoin activity has become more fragmented. While overall retail trading in memecoins declined, the number of tokens traded by individual users doubled, signaling a broadening appetite for micro-cap assets in the long tail of the market.

With that, legacy names like dogecoin DOGE and shiba inu SHIB lost ground to a growing list of niche tokens such as bonk BONK, dogwifhat WIF and popcat POPCAT, the report noted.

Looking ahead to the second half of 2025, Wintermute analysts said to keep an eye on spot dogecoin ETF filings with spot with a final regulatory decision expected by October.

«The outcome could significantly impact the retail market and set a precedent for other alternative assets,» the report said.

Native token of decentralized finance (DeFi) lending platform Aave AAVE surged to its strongest price in several months on Monday

The bluechip DeFi token topped $330 during the session before cooling off at $316, gaining 8% over the weekend.

The rally came as the DeFi sector is heating up amid a broader crypto rally, with bitcoin BTC conquering fresh records above $120,000.

Aave is the dominant player in DeFi lending, and has just hit $50 billion in deposits on the protocol, a fresh record level.

The platform also poised to be one of the biggest gainers of advancing U.S. crypto regulations, analysts said.

«Aave is the biggest lending platform in decentralized finance (DeFi), and it could be a major winner from the GENIUS Act,» digital asset manager 21Shares said in a Monday report.

The platform currently holds 5% of all stablecoin supply to earn a yield, more than any other DeFi protocol, the report noted. It also issues its own, overcollateralized stablecoin GHO GHO, which has a $312 million supply.

Aave also aim to benefit from the growing institutional participation and tokenization wave with the upcoming Horizon project that will let institutions borrow stablecoins by posting tokenized real-world assets such as money market funds as collateral, the report added.

Technical analysis:

CoinDesk’s market analytics model highlighted a bullish structure for AAVE.

• Trading volume spikes to 159,078 units during morning session, confirming institutional accumulation and sustained buying pressure.
• Support base forms at $304.25-$305.63 during initial decline, providing foundation for subsequent rally phase.
• Resistance cluster develops around $327.40 where multiple rejection attempts create volume-weighted ceiling.
• Psychological support at $320.00 attracts consistent demand throughout consolidation period.

The price of XRP (XRP) is likely to swing wildly over the next week, rising or falling more than 10% during Crypto Week on Capitol Hill, the token’s implied volatility indicates.

Volmex Finance’s seven-day XRP implied volatility (IV) index jumped to an annualized 96% from last week’s 73%, a significant premium to the seven-day historical volatility of 42%. The elevated value translates to an expected 13% price swing for XRP over the coming seven days.

The market is pricing much lower volatility in bitcoin (BTC). The seven-day implied volatility for the largest cryptocurrency has increased only slightly to an annualized 46%, equivalent to an expected weekly price swing of about 6%.

The sharp rise in XRP’s implied volatility comes as the U.S. House of Representatives is set to review three major bills this week that could shape the digital assets industry.

The first is the GENUIS Act, which, if passed, would require stablecoin issuers to hold liquid reserves, accept annual independent audits and publish monthly transparency reports.

Also on the table is the CLARITY Act, which will clarify whether cryptocurrencies fall under the SEC or the CFTC’s purview. Lastly, there is the Anti-CBDC Surveillance Act, which will prohibit the Federal Reserve from issuing a retail central bank digital currency. XRP, declared as a strategic U.S. asset by the SEC, stands to benefit from regulatory clarity.

«The GENIUS Act and CLARITY Act are especially important for setting institutional ground rules — clarifying how stablecoins should be issued and overseen, and formally defining the roles of the SEC and CFTC in overseeing crypto markets. Together, these steps address one of the core barriers to institutional participation: legal uncertainty,» Javier Rodriguez-Alarcón, the chief investment officer at crypto liquidity provider XBTO, said in an email.

He added that the rulebook clarity will make long-term capital deployment viable, aligning the world’s largest economy with processes underway in regions like the UAE, where «defined frameworks are already unlocking tokenized markets.»

«If passed, these bills could open the door to wider stablecoin adoption, regulated tokenization, and on-chain financial products with full legal backing,» he noted.

Volatility is direction-agnostic

Note that the implied volatility is direction-agnostic, meaning the expected 13% swing may not necessarily be bullish and can unfold in either direction.

That said, XRP is currently exhibiting strong bullish momentum, trading over 5% higher on the day at $3, the level not seen since early February, according to CoinDesk data.