JPMorgan Chase’s latest research indicates that as ETF outflows slow and futures positions gradually stabilize, the de-risking behavior in the cryptocurrency market may be nearing completion, with the market showing signs of forming a bottom.

(Previous context: Bitwise Chief Investment Officer: Can Bitcoin welcome a long-term bull market in 2026? The key is crossing three major tests)

(Background: Arthur Hayes long article: Elections, oil prices and the money printing machine, why Bitcoin only cares about Trump’s face)

Table of Contents

• Year-end de-risking intensified, ETF funds clearly withdrew
• Price pullback and increased volatility, market enters range consolidation
• January data improved, ETF and futures markets show stabilization signals
• Not caused by liquidity deterioration, de-risking is the main driver

JPMorgan Chase’s latest research report suggests that the cryptocurrency market’s pullback correction may be nearing completion. Based on ETF fund flows, futures market positions, and overall risk sentiment changes, the de-risking behavior that dominated the market in late last year has shown clear signs of slowing, with the market gradually entering a consolidation and stabilization phase, rather than launching a new round of declines.

Year-end de-risking intensified, ETF funds clearly withdrew

JPMorgan Chase noted that during Q4 2025, the cryptocurrency market experienced significant selling pressure. Bitcoin and Ethereum spot ETFs saw substantial capital outflows in December, while global equity ETFs, in contrast, attracted record fund inflows.

This divergence in fund flows reflects investors rebalancing their portfolios ahead of year-end, significantly reducing their exposure to high-risk assets like cryptocurrencies, which became an important background factor driving the market correction.

Price pullback and increased volatility, market enters range consolidation

After accumulating substantial gains in the previous bull market, Bitcoin and Ethereum declined noticeably in recent months. Among them, Bitcoin fell double-digit percentages from its highs, with most mainstream altcoins experiencing even steeper declines.

JPMorgan Chase believes that this correction is accompanied by increased market volatility and a decline in overall risk appetite, causing crypto assets to shift to range-bound trading after last year’s surge, with the market lacking clear direction in the near term.

January data improved, ETF and futures markets show stabilization signals

However, entering January 2026, JPMorgan Chase observed multiple indicators turning. The capital outflow rates from Bitcoin and Ethereum ETFs began to narrow, indicating that selling pressure is gradually easing.

Meanwhile, in perpetual futures markets and based on position proxy indicators established by CME futures, analysts also discovered similar bottom signals, suggesting that position reduction activities driven by both retail and institutional investors over the past quarter may have largely been completed.

The report further points out that MSCI decided in its February 2026 index review not to exclude Bitcoin and cryptocurrency treasury companies from its global equity indices, bringing positive sentiment to the market.

JPMorgan Chase believes that this decision reduces the risk of passive selling triggered by index adjustments, particularly helping to ease market pressure in the short term regarding investment exposure related to MicroStrategy (formerly MicroStrategy).

Not caused by liquidity deterioration, de-risking is the main driver

Regarding market speculation that the decline stems from liquidity deterioration, JPMorgan Chase refuted this view in its report. The bank stated that its market breadth indicators show no signs of obvious 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 that triggered market pre-emptive de-risking and subsequent corrections.

Therefore, synthesizing various observations, JPMorgan Chase concludes that most position adjustments in the current market appear to have been completed. January-related data more suggests the market is entering a bottom-forming and consolidation phase, rather than the beginning of a new sharp decline.

After de-risking has run its course, the cryptocurrency market in the near term may be dominated by range consolidation, with future trends continuing to depend on macroeconomic environment, policy developments, and the pace of capital reallocation.