JPMorgan (JPM) said there are growing signs that the recent selloff in crypto markets may be nearing a bottom, with flow and positioning indicators pointing to stabilization after heavy de-risking late last year.
“Signs of a bottoming out in January are also seen in other crypto indicators in perpetual futures and in our position proxies on CME futures,” analysts led by Nikolaos Panigirtzoglou wrote.
Bitcoin $BTC$90,366.40 and ether $ETH$3,090.81 exchange-traded funds (ETFs) saw notable outflows in December, even as global equity ETFs attracted a record $235 billion of inflows, the bank said in a Wednesday report. That divergence underscored how sharply investors reduced crypto exposure into year-end.
$BTC and $ETH have both fallen in recent months after strong gains earlier in the cycle, with bitcoin down double digits from its recent peak and major altcoins posting steeper declines.
The correction has coincided with heavier volatility, ETF outflows and a broader cooling in risk appetite across global markets, leaving crypto prices range-bound after last year’s rally.
However, the analysts noted that ETF data so far in January suggest selling pressure is easing, with flows into bitcoin and ether funds beginning to stabilize.
The bank’s analysts sees similar signs of bottoming in perpetual futures markets and in its positioning proxies derived from Chicago Mercantile Exchange (CME) futures, indicating that both retail and institutional investors may have largely completed the position reductions that dominated the final quarter of 2025.
This tentative stabilization could be reinforced by MSCI’s decision not to exclude bitcoin and crypto treasury companies from its global equity benchmarks in the February 2026 review, the report said.
While MSCI has signaled a broader review of its methodology in the future, the analysts said the decision provides near-term relief, particularly for Strategy-linked exposure, and reduces the risk of forced selling tied to index changes.
The report also pushed back on the idea that deteriorating liquidity drove the recent correction. The bank said its market breadth metrics, which measure the price impact of trading volumes in CME bitcoin futures and major bitcoin ETFs, show little evidence of worsening liquidity conditions. Instead, the firm argued that de-risking triggered by MSCI’s October announcement around potential index exclusions was the primary catalyst for the downturn.
Taken together, JPMorgan analysts concluded that the bulk of the crypto position unwind now appears to be behind the market, with January’s data pointing to a possible bottoming phase rather than the start of a new leg lower.
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