Crypto Continues to Lag Despite Supportive Macro Conditions, Wintermute Says Liquidity is Flowing Elsewhere

Edyme

November 5, 2025

The report notes that after the most recent FOMC meeting, traders quickly rebalanced their positioning, leading to a sell-off in digital assets

The crypto market may be waiting for its next big catalyst, but according to market maker Wintermute, the problem isn’t a lack of liquidity, it’s that the liquidity simply isn’t flowing into digital assets anymore.

In a new report titled “Crypto underperforms other asset classes despite supportive macro backdrop,” the firm argues that while central banks are easing policy and risk assets are broadly benefiting, crypto has been left behind as capital rotates into equities and AI-linked markets instead.

Liquidity is growing, but It’s skipping crypto

Wintermute points out that the macro environment has turned increasingly favorable: the Federal Reserve has begun cutting rates, quantitative tightening has officially concluded, and U.S. equities continue to hover near all-time highs.

Yet crypto markets have shown little reaction. The report notes that after the most recent FOMC meeting, traders quickly rebalanced their positioning, leading to a sell-off in digital assets while stocks stabilized.

“Liquidity is expanding globally, yet capital isn't reaching crypto,” Wintermute wrote in the report shared on X. “ETF inflows have stalled, DAT activity has dried up, and only stablecoins are still growing.”

Wintermute breaks down the current state of crypto inflows into three areas that previously helped drive market momentum: stablecoins, spot ETFs, and digital asset token (DAT) activity.

Of those three, only stablecoins are still expanding. The firm notes that stablecoin supply has grown by more than $100 billion this year, up over 50%, which shows that capital is still entering the ecosystem, just not circulating into the broader market.

ETF inflows, on the other hand, have flattened out after a strong first half of the year. Assets under management for Bitcoin ETFs have been stuck around the $150 billion range since the summer, suggesting that institutional allocation has slowed rather than accelerated.

Meanwhile, the once-hyped DAT market, which includes token launches and secondary market activity on traditional exchanges, has largely faded, with volumes collapsing across platforms like Nasdaq.

In short: stablecoins are still growing, ETF flows have stalled, and DAT activity has dried up, leaving crypto without the same fuel that drove earlier rallies.

Why crypto Is underperforming and what could shift momentum

Despite improvements in leverage and market structure, crypto remains one of the weakest performers among major asset classes.

Wintermute’s weekly breakdown shows broad declines across sectors, with the GMCI-30 index down 12%, gaming down 21%, L2s down 19%, and meme tokens down 18%. Only AI and DePIN sectors showed relative stability.

BTC and ETH, meanwhile, continue to trade in narrow ranges. Wintermute notes that neither asset has reacted the way traditional macro models would predict given falling rates and expanding liquidity, a sign that structural inflows, not macro policy, are currently dictating price direction.

One of the report’s more pointed claims is that the famous “four-year crypto cycle,” historically tied to Bitcoin halvings, is no longer relevant.

Wintermute argues that crypto is now less dependent on miner supply dynamics and more dependent on the same liquidity flows that move equities and credit markets. “The mechanics that once drove it simply don't matter anymore in a mature market. What drives performance now is liquidity.”

So what would actually pull crypto out of its current slump? Wintermute suggested two things that should be monitored:

ETF inflows: a resumption of major inflows could help the current market condition.
A revival in DAT activity (token launches, secondary trading, etc.)

Until then, the firm expects crypto to continue trailing other risk assets, even if the macro backdrop continues to improve.

Final takeaway

The report doesn’t paint a bearish outlook, instead, it suggests crypto may be stuck in a waiting game.

Liquidity is available, markets are not over-leveraged, volatility is contained, and institutional rails like spot ETFs are already live. The disconnect, Wintermute says, is simply that new capital is choosing different playgrounds for now.

Or as the report puts it more bluntly: “The tap isn’t off, it’s just pointed somewhere else.”