Retail Traders Shift Focus from Crypto to Equities Amid Declining Leverage

Retail traders have been redirecting their capital away from cryptocurrencies and towards traditional stocks in recent months, according to data from various exchanges. This shift is largely driven by declining leverage and thinning liquidity in the crypto market.

The Estimated Leverage Ratios (ELR) for major exchanges have plummeted by 28%, indicating a significant reduction in speculative activity. Additionally, spot volumes are down 25-30% on some platforms, further supporting the notion of decreased retail participation.

Meanwhile, equities markets have seen a surge in activity, with retail traders funneling record amounts into cash equities and options in January 2026 alone. This trend is likely to continue, as analysts predict a range-bound market through mid-2026 due to the current lack of retail risk appetite.