The little guy has been the driving force of the stock market in 2025. That strength is now eroding, as shown by the recent moves in crypto. Bitcoin has fallen more than 30% since hitting a peak of $126,279.63 in early October, hurt by souring sentiment toward risk assets, questions over future monetary policy moves and sky-high valuations in artificial intelligence stocks. Many investors who own AI stocks are also heavily invested in cryptocurrencies, led by bitcoin. Bitcoin’s role as a leading indicator is also seen when looking at its performance relative to meme stocks. Check out the chart below that shows bitcoin’s performance against the Roundhill Meme Stock ETF (MEME) , which relaunched in October — around the same time as bitcoin peaked. The exchange-traded fund, which holds so-called meme stocks, has tumbled more than 35% since returning on Oct. 8. In that time, bitcoin has plunged nearly 30%. “Crypto under pressure not helping sentiment within the retail community,” wrote John Flood, fead of Americas equities sales trading at Goldman Sachs. Others are more sanguine. The buy-the-dip mentality that has characterized retail traders remains in place, according to JPMorgan’s trading desk. “While the rapid decline in bitcoin may raise concerns over retail investors, data from JPM Quant Research does not show that: in fact, last Friday was the first net selling day from retail traders in more than 3 months, following the largest buying day in 5 months last Monday,” they said in a note. “Despite the bearish bias on headlines yesterday, there were no significant” catalysts to mark a “shift in market narrative,” the bank wrote. But it’s unclear to what degree retail traders will keep buying the dip if these pressures persist. Bottom line: Keep an eye on crypto. It’s likely to continue to serve as a leading indicator for other risk markets, at least through year-end.
Crypto sell-off threatens to take out this year’s biggest stock market supporter: the retail trader
Dec 2, 2025
