JPMorgan says crypto de-risking is likely over as ETF flows stabilize

Crypto de-risking appears to be easing, as signs of stabilization are emerging across crypto ETF flows and other indicators, JPMorgan analysts said.

Bitcoin and Ethereum ETFs saw outflows in December, even as equity ETFs recorded their strongest monthly inflows on record, with $235 billion flowing into equity products globally, JPMorgan analysts, led by managing director Nikolaos Panigirtzoglou, wrote in a Wednesday report.

This month, however, several indicators point to stabilization in crypto markets. ETF flow data for bitcoin and ETH are showing early signs of "bottoming out," while positioning indicators in perpetual futures markets and CME bitcoin futures suggest selling pressure may be easing, the analysts said.

“Taken together, all these indicators suggest that the previous crypto position reduction by both retail and institutional investors during the last quarter of 2025 is likely behind us,” the analysts wrote.

This stabilization could be reinforced by MSCI’s recent decision not to exclude bitcoin and crypto treasury companies from its global equity benchmarks in its February 2026 index review, the analysts argued. While MSCI said it will conduct a broader review of how such companies are treated in the future, the decision provides “at least temporary relief” for firms such as Strategy, they said.

The analysts also addressed whether worsening liquidity conditions played a role in the recent crypto correction and said that was “most likely not” the case. They pointed to market breadth and liquidity metrics — including measures of the price impact of trading volumes in CME bitcoin futures and bitcoin ETFs — and said they see little evidence that liquidity deterioration drove the selloff.

"Instead, we believe that de-risking, triggered by the October 10th MSCI announcement regarding MicroStrategy index exclusion, has been the main driver of the crypto market correction," the analysts said. "The good news is that there are signs of stabilization and bottoming out in crypto flow and positioning indicators in January, suggesting that the previous position reduction by investors is largely behind us."

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