The retail prop trading market appears to be facing a period of oversaturation and instability, as demonstrated by the rapid collapse of Ascetic Capital, a new firm that announced it was ceasing operations after barely a week in business. Ascetic Capital’s failure to meet expectations is a tangible example of the intense competition and volatility in the sector. Despite spending months teasing its launch and promoting a unique A-book model, the firm managed to sell only four challenges in its first week, which led to a breach of contract conditions and the withdrawal of investor backing. As a result, Ascetic Capital chose to initiate refunds and shut down operations, a move that reflects broader trends in the prop trading space.

This shutdown is not an isolated incident. On the same day Ascetic Capital folded, Smart Prop Trader, another prop firm, also announced its closure, citing similar challenges in onboarding new traders and maintaining operations in a competitive environment. Industry sources report that at least 50 other prop firms have ceased their operations this year, contributing to significant financial losses for traders, many of whom were either locked out of their accounts or did not receive the payouts they had earned. These closures reflect the high risks and pressures within the retail prop trading market, where firms face increasing difficulty in standing out and generating consistent revenue.

Despite these closures, industry experts remain cautiously optimistic about 2025, anticipating better trading conditions. However, many believe the industry will continue to experience consolidation, with a few major players dominating the market and smaller firms struggling to survive. In fact, 71% of U.S. respondents in a recent survey expect the market to be increasingly controlled by larger firms, signaling a potential shift toward fewer but stronger contenders in the prop trading space.

The retail prop trading market is clearly facing growing pains. While the industry’s appeal remains strong, particularly in terms of its low barrier to entry for retail traders, the oversaturation and failure of numerous firms suggest that only those with strong financial backing, effective risk management, and differentiated offerings will be able to endure. As the market continues to evolve, it’s likely that more firms will face tough decisions on whether to scale or exit, and consolidation could reshape the landscape in the years to come.