Retail Investors Exit Bitcoin Market, Flock to 'Casinos'

▲ Bitcoin (BTC), gambling apps, prediction markets/AI-generated image

Recently, retail investors who had been supporting the virtual asset market have reportedly moved en masse to more stimulating gambling venues, a shift interpreted as the result of Bitcoin’s prolonged slump.

Nic Puckrin, host of the cryptocurrency-focused YouTube channel Coin Bureau, pointed out in a video released on February 19 (local time) that, unlike in the past, retail inflows are not occurring even when Bitcoin (BTC) prices show signs of recovery, warning of a market cooldown. Puckrin analyzed that retail investors have not left the market entirely but have instead migrated from virtual assets to more stimulating gambling platforms with faster outcomes. In fact, Coinbase’s monthly active users declined from 11.4 million in 2021 to 7.8 million by the end of 2025, signaling a significant drop in market vitality.

Retail capital is now flowing not into cryptocurrencies that require technical understanding but into prediction markets such as Polymarket and Kalshi, as well as sports betting platforms. Trading volumes on these platforms have surged more than 130-fold compared to early 2024, recording over $44 billion in transactions in 2025 alone. Robinhood’s fourth-quarter 2025 earnings also showed growth in stock and options revenue, while cryptocurrency revenue fell 38% year-over-year to $221 million, proving that retail investment preferences have fundamentally shifted.

Within the crypto ecosystem, the only segment maintaining retail participation is memecoins, yet even these resemble pure gambling with little connection to technological innovation. Most investors have grown weary of a structure in which venture capital firms secure tokens at low prices and offload them onto retail buyers. Among major tokens launched in 2025, 85% are currently trading at more than 70% below their initial offering prices. Frequent cases such as the Trump memecoin scandal—where insiders collected hefty fees while retail investors suffered losses totaling $2 billion—have driven market trust to the bottom.

Massive institutional funds flowing through spot Bitcoin ETFs remain confined to Bitcoin and Ethereum (ETH), creating a structural break in which capital no longer rotates into altcoins as it once did. Large institutional investors such as BlackRock focus solely on Bitcoin as a passive asset and show little interest in smaller governance tokens. As Bitcoin season continues with Bitcoin dominance nearing 60%, the altcoin market faces a precarious situation in which it is difficult to find a catalyst for rebound without new retail capital inflows.

The virtual asset market has now fully bifurcated into an institution-driven Bitcoin-centric asset domain and a memecoin-centered gambling arena, entering an era where the synchronized growth of the past is no longer possible. Puckrin noted that retail investors have shifted from reading whitepapers to betting on sports outcomes, assessing that market maturation has paradoxically removed the engine that once drove volatility. As simpler and more stimulating betting platforms replace the wealth effect once led by virtual assets, the market now faces the challenge of fundamentally restructuring itself and securing new growth drivers.

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