JPMorgan (JPM) has observed increasing evidence that the recent downturn in cryptocurrency markets might be approaching its lowest point. Indicators related to market flows and investor positioning suggest a stabilization following significant risk reduction towards the end of last year.
According to analysts led by Nikolaos Panigirtzoglou, “Indicators signaling a potential bottom in January are also reflected in various crypto metrics such as perpetual futures and our position proxies based on CME futures.”
The bank highlighted that Bitcoin (BTC) and Ether (ETH) exchange-traded funds (ETFs) experienced substantial outflows during December, even as global equity ETFs attracted an unprecedented $235 billion in inflows. This contrast highlights how sharply investors pulled back from crypto exposure at year-end.
Both BTC and ETH have declined over recent months after earlier strong gains within the cycle. Bitcoin has dropped by double digits from its peak, while major alternative cryptocurrencies have seen even steeper losses.
This correction coincided with increased volatility, ETF withdrawals, and a general decline in risk appetite across worldwide markets, resulting in cryptocurrency prices remaining range-bound following last year’s rally.
Nevertheless, January’s ETF data indicates that selling pressure is diminishing as inflows into bitcoin and ether funds begin to stabilize.
The analysts also detected similar signs of stabilization within perpetual futures markets along with positioning indicators derived from Chicago Mercantile Exchange (CME) futures. These patterns imply that both retail traders and institutional investors may have largely completed their position reductions which dominated Q4 of 2025.
This emerging stability could be further supported by MSCI’s decision not to remove bitcoin or crypto treasury firms from its global equity benchmarks during the February 2026 review period.
While MSCI plans a broader methodology review later on, this choice offers short-term relief—especially for strategy-linked exposures—and lowers the chance of forced selling triggered by index adjustments according to JPMorgan’s report.
The report challenges claims suggesting deteriorating liquidity caused the recent market drop. Instead, JPMorgan points out that their market breadth metrics—which assess price impacts relative to trading volumes for CME bitcoin futures and leading bitcoin ETFs—show minimal signs of worsening liquidity conditions. The firm attributes the downturn primarily to de-risking prompted by MSCI’s October announcement regarding possible index exclusions.
Overall, JPMorgan’s analysts conclude most unwinding of crypto positions appears complete now; data from January suggests we may be witnessing a bottoming phase rather than initiation of another downward trend.
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