We spoke with Axi’s Market Analyst, Thiago Duarte, to find out how the behaviour of retail traders is changing in response to a bearish market.
After setting successive all-time highs earlier this year, Bitcoin has returned to the price levels it smashed following the major liquidation event that rocked markets in early October. Financial institutions have reacted accordingly, with US spot bitcoin (BTC) and ether (ETH) exchange-traded funds (ETFs) losing a combined US$582 million in net outflows mid-December.
Retail traders, too, have not been spared from the market upheaval. Over 1.6 million traders were wiped out on 10 October with a combined liquidation loss of US$19 billion, resulting in one of the largest wipeouts in the history of crypto trading.
But could the market shakeout ultimately benefit long-term crypto investors? We spoke with Axi’s Market Analyst, Thiago Duarte, to understand how the bearish downturn isn’t all doom and gloom, and how retail traders can position themselves for 2026.
Tell us more about Axi and the services it offers to retail traders.
Axi is a global online broker offering retail traders access to a comprehensive range of financial instruments including forex, commodities, indices, shares, crypto CFDs, crypto perpetuals, and spot crypto. We differentiate ourselves by offering retail clients institutional-grade trading technology, competitive spreads, deep liquidity and professional execution speeds.
Our platform supports MT4 and MT5 alongside innovative solutions such as Axi Select, an allocation programme that lets retail traders trade with our capital and scale their operations. This creates a clear pathway for talented retail traders to move toward professional-level trading by accessing capital beyond their own.
Which crypto CFDs have been most popular on Axi, and what do you think is driving demand for these products?
Bitcoin and Ethereum dominate trading volumes, which isn’t surprising given their liquidity and institutional recognition. Interest in Solana CFDs surged in 2025 as ETF approval momentum built. This surge reflects crypto’s maturation as an asset class, clearer regulation in key markets and broader access to leveraged trading in regulated markets.
Retail traders also appreciate that crypto CFDs offer 24/7 market access without the custody risks of holding actual tokens. The October liquidation event accelerated demand as traders wiped out on unregulated platforms began seeking the consumer protections and risk management tools offered by regulated brokers.
Axi Select’s Head, Greg Rubin, said that Bitcoin and gold are the two most traded products on Axi Select. What does this suggest about how retail traders are using Bitcoin?
This correlation highlights Bitcoin’s evolution into a macro hedge rather than pure speculation. When traders pair Bitcoin with gold, they are expressing views on currency debasement, inflation and systemic risk, the same drivers that have traditionally driven investors to hold gold.
This behaviour accelerated as institutional adoption grew, reinforcing Bitcoin’s role as a portfolio diversification tool. The US dollar’s 10% decline this year, alongside gold reaching $3,800 and Bitcoin touching $125,000, supports this view. These moves are not coincidental but reflect coordinated responses to the same macro pressures. Volatility has also surged across both crypto and gold markets, creating favourable conditions for scalping strategies.
Short-term traders are capitalising on intraday moves that regularly exceed 2–3% in Bitcoin, as well as sharp gold swings around key macro events. This environment offers multiple trading opportunities each day without the need to hold overnight risk.
The liquidation event in October saw more than US$19 billion in leveraged crypto positions wiped out. How have retail traders reacted since then?
The $19 billion liquidation was a brutal lesson in leverage risk. Over 1.6 million traders were liquidated in just 24 hours, marking the largest wipeout in crypto history. Retail traders responded in two clear ways. First, there was a dramatic shift towards regulated platforms that offer proper risk management tools. The Wild West era of 100x leverage on unregulated exchanges is fading as traders realise consumer protections matter when volatility strikes. Second, position sizing has become significantly more conservative. Traders who survived are running lower leverage ratios and wider stop-losses, accepting smaller gains in exchange for capital preservation.
Interestingly, this hasn’t killed crypto appetite. Instead, it’s matured it. Trading volumes recovered within weeks, but with healthier risk profiles. Traders returning to the market are asking better questions about counterparty risk, margin requirements, and circuit breakers. This is precisely the maturation process crypto needed to transition from speculative casino to legitimate asset class.
That liquidation was partly attributed to Trump’s tariffs on Chinese imports. How likely are tariffs and broader geopolitics to continue influencing markets in 2026?
Geopolitical volatility will be a defining feature of 2026, and tariffs are only the beginning. Trump’s 100% China tariff threat highlighted how closely crypto is now tied to broader macro risk. The idea that crypto trades in isolation from equities, bonds or commodities no longer holds. When the Nasdaq fell 3.6%, Bitcoin did not decouple, it amplified the move.
Several fault lines are likely to drive volatility. Unresolved US-China trade tensions, including rare earth mineral restrictions and technology export controls, continue to pose systemic supply chain risks. The October liquidation showed how quickly tariff announcements can move markets, triggering around $7 billion in forced selling within an hour. Shifting central bank dynamics, including the end of Jerome Powell’s terms and expectations of a more dovish Fed chair, are likely to increase currency volatility and impact crypto flows. Regulatory uncertainty around crypto ETF approvals for altcoins like Solana and XRP will also contribute to boom-bust cycles as sentiment shifts.
The key takeaway is that crypto has become a barometer for geopolitical risk, often moving before traditional markets and rewarding traders who stay macro-aware and flexible.
The US has taken a pro-crypto stance so far. How much do you expect this to benefit retail traders in practice, given that the Federal Reserve has signalled a relatively hawkish approach to rate cuts into 2026?
The pro-crypto rhetoric doesn’t match the monetary policy reality, and that creates dangerous complacency. Yes, Trump has allowed crypto in 401(k) plans and launched his own meme coin, but the Fed’s hawkish stance, with only two projected cuts remaining in 2025, fundamentally contradicts the liquidity conditions crypto needs to thrive.
The uncomfortable truth is that crypto bull markets depend on loose monetary policy and abundant liquidity. With the Fed holding rates above 4.25% whilst inflation sits at 3.8%, headwinds have been created that political support can’t overcome. Retail traders chasing pro-crypto headlines while ignoring Fed policy are focusing on the wrong driver.
The real benefit of political backing will be regulatory clarity and stronger institutional infrastructure, including spot ETFs, clearer legal frameworks and mainstream adoption. However, price appreciation requires capital, and capital becomes scarce when rates stay elevated. Retail traders should prepare for a bifurcated market as well. ETF inflows may support Bitcoin and Ethereum, but without a liquidity surge, altcoins will struggle. Traders who grasp this macro split will outperform those chasing political narratives.
The much-anticipated altcoin season has yet to fully materialise, despite Bitcoin’s all-time high this year. How has this affected retail traders’ positioning?
The missing altcoin season has frustrated many traders and forced a strategic rethink. Bitcoin hit $125,000, yet the Altcoin Season Index sits at just 39 as of December 2025, meaning only 39% of top altcoins have outperformed Bitcoin over the past 90 days. This breaks the traditional cycle pattern where Bitcoin rallies, consolidates, then capital rotates into altcoins for explosive gains.
Several factors explain this shift. Institutional flows remain concentrated in Bitcoin and Ethereum ETFs, with no comparable infrastructure directing billions into altcoins. Bitcoin dominance remains above 58%, historically too high to support broad altcoin outperformance. In parallel, the leverage that fuelled previous altcoin manias was crushed during the October liquidation. Retail traders who ran 50x-100x positions on low-cap altcoins either got wiped out or learned painful lessons about liquidity.
As a result, retail traders have shifted away from broad altcoin baskets toward more selective bets with clearer institutional interest, such as Solana pending ETF approval, XRP following regulatory clarity and AI-focused narratives. The spray-and-pray approach that worked in 2021 no longer holds up in a more mature, institutionally driven market.
The frustration is real, but it is also improving discipline. Traders are learning that not every Bitcoin rally leads to altcoin euphoria, and that patience and market structure now matter more than chasing momentum.
What is your outlook for retail traders in 2026, and what steps would you recommend for the year ahead?
The October liquidation was a clear reminder that excessive leverage destroys capital and unregulated platforms offering extreme leverage should be avoided. Beyond this, it’s clear that macro forces now drive crypto markets more than crypto headlines. Fed policy, trade decisions and geopolitics are setting direction, making regulated platforms a strategic necessity. Consumer protections and proper margin controls provide critical safeguards during periods of stress.
Ultimately, 2026 will separate disciplined traders from gamblers. The combination of restrictive Fed policy, heightened geopolitical volatility, and crypto market maturation creates an environment where edge matters more than ever. Traders who succeed will treat crypto as a serious asset class requiring professional risk management, not a speculative shortcut.
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