"Cryptocurrency Sell-Off" Nearing the End! JPMorgan: ETF Fund Outflows Stabilized, Worst Phase Has Passed

JPMorgan Chase states that the recent sharp correction in the cryptocurrency market may be gradually approaching a bottom. Based on various indicators such as capital flows and position allocations, after the large-scale deleveraging at the end of last year, the market has shown initial signs of stabilization. The analyst team led by Nikolaos Panigirtzoglou pointed out: “In January this year, multiple cryptocurrency indicators have simultaneously shown signs of bottoming out, not only reflected in the perpetual contract market but also in the investor exposure indicators derived from our calculations based on CME futures positions.”

Bitcoin and Ethereum ETF capital inflows stabilize Looking back to December 2025, the global financial markets experienced an extreme “hot stocks, cold cryptocurrencies” phenomenon. At that time, global stock ETFs surged by $235 billion, setting a record; meanwhile, Bitcoin and Ethereum spot ETFs faced continuous capital outflows, indicating that investors significantly reduced their cryptocurrency exposure before the end of the year. In recent months, Bitcoin has corrected by double digits from its all-time high, and more volatile competing coins have fallen even further. This correction, accompanied by increased volatility and ETF redemption waves, suggests that global market risk appetite has contracted, causing prices to fluctuate within a range after last year’s sharp rise. However, JPMorgan analysts emphasize that after January 2026, selling pressure seems to have waned, and capital inflows into Bitcoin and Ethereum ETFs are beginning to stabilize, indicating that the most intense phase of selling has passed. Decline in Selling Pressure In addition to ETF capital flows, the derivatives market also shows signs of stabilization. The report notes that by observing changes in perpetual contracts and CME futures positions, it appears that both retail and institutional investors have largely completed their “de-risking” actions that dominated the market in Q4 2025. The accumulation of positions is often a key precursor to market bottoming. Another confidence booster for the market comes from the latest decision by index giant MSCI. MSCI Decision as a Short-term “Stop-loss Point” JPMorgan Chase points out that MSCI has decided in its Q2 2026 quarterly review not to exclude companies like Strategy and Bitmine, which hold large amounts of cryptocurrencies, from the global equity benchmark index for now. Although MSCI may review this methodology in the future, analysts believe that this decision temporarily alleviates the “forced selling” warning faced by passive funds, greatly reducing the risk of selling pressure caused by changes in index constituents, and providing investors with some breathing room. Regarding some market opinions attributing recent corrections to “liquidity depletion,” JPMorgan also refutes this. The analyst team states that the market breadth indicator, which measures the impact of CME Bitcoin futures and major ETF trading volumes on prices, shows no obvious signs of deteriorating liquidity. The real culprit behind the panic-driven deleveraging was actually the fear-driven reaction triggered last October when MSCI announced the possible removal of “coin-holding stocks,” leading to a panic deleveraging effect.