JPMorgan: Crypto market sell-off nearing the end, signs of Bitcoin bottoming out emerging

JPMorgan’s latest research indicates that the market correction in cryptocurrencies may be nearing its end. Based on ETF capital flows, futures market positions, and overall risk sentiment changes, the risk-off behavior that dominated the market at the end of last year has shown clear signs of slowing down. The market is gradually entering a consolidation and stabilization phase rather than embarking on a new downward trend.

End-of-year increased risk-off, ETF funds clearly withdrawn

JPMorgan points out that during Q4 2025, the cryptocurrency market experienced significant selling pressure. Both Bitcoin and Ethereum spot ETFs saw large outflows in December, while global equity ETFs attracted record-breaking inflows, creating a stark contrast.

This divergence in capital flows reflects investors reallocating assets before year-end, significantly reducing exposure to high-risk assets like cryptocurrencies, which also served as an important background factor driving market correction.

Price declines and increased volatility, market enters range-bound consolidation

After substantial gains accumulated during the previous bullish run, Bitcoin and Ethereum prices have notably retreated in recent months. Bitcoin has fallen by double digits from its peak, with most mainstream altcoins experiencing even sharper declines.

JPMorgan believes this correction, accompanied by increased market volatility and a cooling of overall risk appetite, has turned the crypto assets into a range-bound oscillation after last year’s surge, with short-term market direction lacking clarity.

January data improvement, ETF and futures markets show signs of stabilization

However, after January 2026, JPMorgan observed several indicators turning positive. Capital outflows from Bitcoin and Ethereum ETFs began to slow, indicating reduced selling pressure.

At the same time, in the perpetual futures market and through position proxy indicators based on CME futures, analysts also detected similar bottoming signals, suggesting that both retail and institutional investors, who had been reducing their positions over the past quarter, may have largely completed their adjustments.

The report further notes that MSCI’s index review in February 2026 decided not to exclude Bitcoin and crypto-related treasury companies from its global equity indices, which positively impacted market sentiment.

JPMorgan believes this decision reduces the risk of passive selling triggered by index rebalancing, especially for investments related to Strategy (formerly MicroStrategy), helping to ease market pressure in the short term.

Due to illiquidity deterioration, risk-off is the main cause

In response to the external view that market declines stem from liquidity issues, JPMorgan refutes this in the report. The bank states that its market breadth indicators show no signs of significant liquidity deterioration in either CME Bitcoin futures or major Bitcoin ETFs.

In contrast, analysts believe that the signals released by MSCI in October last year regarding potential index exclusions were the main catalysts for the market’s early risk-off behavior and subsequent correction.

Therefore, based on various observations, JPMorgan concludes that most of the position adjustments in the market appear to have been completed. The data from January further suggests that the market is entering a bottoming and consolidation phase rather than starting a new large-scale decline.

After the risk-off phase concludes, the cryptocurrency market is likely to remain volatile and range-bound in the short term. The future trend will still depend on macroeconomic conditions, policy developments, and the pace of capital reallocation.