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Crypto Selloff Driven by Native Investors, Not ETFs or Institutions, Says JPMorgan
- JPMorgan analysts found minimal evidence of institutional or ETF involvement in the crash, attributing the selloff primarily to deleveraging by overleveraged momentum and quant traders.
- Bitcoin extended its decline to around US$108k after liquidations wiped over US$6 billion from markets, falling from October’s record highs above US$126k.
- Mounting US-China trade tensions and banking sector concerns, including fraud-related write-downs and the Tricolor Holdings collapse, have pushed investors toward safe-haven assets like gold while weighing on equities and crypto.
- Despite price uncertainty, major players continue pursuing long-term adoption with strategic moves by Ripple and BitMine.
JPMorgan analysts say last week’s sharp crypto correction stemmed mainly from crypto-native investors rather than institutional players or ETF holders.
JPMorgan managing director Nikolaos Panigirtzoglou and his team said there’s “little evidence” of significant involvement by these ETFs in the crash. The bank noted minimal outflows from Bitcoin and Ethereum ETFs and limited liquidation in CME Bitcoin futures, suggesting the sell-off was largely due to deleveraging by momentum and quant traders.
Overleveraged traders were caught off guard by a tweet from the US President, which triggered a cascade of unwound positions and one of the largest crypto crashes on record, with close to US$20 billion (AU$30 billion) in losses.
Market Crash Deepens
Bitcoin extended its slide this week, hovering near US$108k (AU$167k) after the latest wave of liquidations erased more than US$6 billion (AU$9.2 billion) from crypto markets.
The decline followed October’s record highs above US$126k, with traders citing fading momentum and renewed macro headwinds. Some analysts see the pullback as part of a broader de-risking trend across global assets, as investors brace for weaker growth and tighter financial conditions.
Related: Ripple Partners With Absa Bank to Launch Digital Asset Custody in South Africa
Ethereum and other major tokens mirrored Bitcoin’s decline with ETH down nearly 12% over the past month despite record inflows into US spot exchange-traded funds earlier this year.
Adding to market unease, heightened US-China trade tensions and a string of banking sector scares — including fraud-linked write-downs and the collapse of subprime lender Tricolor Holdings — have reignited fears over credit quality. Those shocks have weighed on equities and pushed investors toward safer assets such as gold, which recently hit fresh highs.
Growing Adoption Amid Price Uncertainty
Despite the correction, industry players continue to double down on long-term adoption. Ripple’s US$1 billion (AU$1.5 billion) acquisition of treasury-management firm GTreasury and BitMine’s US$417 million (AU$645 million) Ethereum purchase underline efforts to integrate blockchain into traditional finance.
For now, sentiment remains fragile. The Crypto Fear and Greed Index has slipped to its lowest since April, while option markets show traders paying a premium for downside protection — signs that confidence in a quick recovery remains elusive.
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Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
