A large share of investors has shifted attention to services for artificial intelligence operators, triggering capital outflows from cryptocurrencies and amplifying turbulence in digital assets. Wintermute analysts say this capital rotation has constrained bullish potential in crypto, and with low spot trading volumes, price swings are likely to be limited. A sustained recovery in the market quotes of popular cryptocurrencies will require renewed demand from retail and institutional investors, which is not yet evident.

The market is also suffering from a high concentration of coins among a small number of large holders, creating a classic “bottleneck” effect. Even modest selling by these holders can trigger sharp moves and increase volatility. Uncertainty in global financial markets reduces the willingness of new investors to enter the crypto market. Under these conditions, demand recovery has slowed, and digital assets remain highly vulnerable to external shocks.

Earlier, Bitwise adviser Jeff Park said that risk management mechanisms at large institutional investors played a central role in the crypto sell-off. The combination of factors — capital outflows into the AI sector, high asset concentration, and institutional risk controls — creates structural obstacles to a short‑term recovery in the crypto market.