JPMorgan Chase analysts suggest the recent significant correction in the cryptocurrency market is showing strong indications of reaching its bottom. A comprehensive analysis of various metrics, including capital flows and investor positioning, reveals preliminary signs of stabilization following the extensive deleveraging event observed at the close of last year.
Led by strategist Nikolaos Panigirtzoglou, the JPMorgan team highlighted: “Multiple cryptocurrency indicators exhibited synchronized signs of bottoming in January, evident not only in the perpetual futures market but also in our investor exposure metrics derived from CME futures positions.”
Bitcoin, Ethereum ETF Inflows Stabilize
This potential turnaround follows a period of stark divergence in global financial markets during December 2025. While global equity ETFs attracted a record-breaking $235 billion, Bitcoin and Ethereum spot ETFs experienced persistent outflows. This trend underscored a significant reduction in investor exposure to cryptocurrencies as the year concluded.
In recent months, Bitcoin saw a double-digit percentage correction from its all-time highs, with more volatile altcoins experiencing even steeper declines. This pullback was characterized by heightened volatility and a wave of ETF redemptions, reflecting a broader contraction in global market risk appetite and pushing crypto asset prices into a consolidation phase after last year’s robust rally.
However, JPMorgan analysts now assert that by January 2026, the intense selling pressure appears to have largely dissipated. Crucially, fund flows into both Bitcoin and Ethereum ETFs have begun to stabilize, signaling that the most aggressive phase of the sell-off has likely concluded.
Selling Pressure Subsides
Beyond ETF flows, the derivatives market offers further evidence of a stabilizing trend. The report notes that changes in open interest across perpetual contracts and CME futures suggest that both retail and institutional investors have largely completed the “de-risking” activities that dominated Q4 2025. This consolidation of positions is often a critical precursor to a market bottom.
Adding another layer of confidence to market sentiment is the recent decision by index giant MSCI.
MSCI Decision Becomes Short-Term “Stop-Gap”
JPMorgan points out that MSCI opted against removing major cryptocurrency-holding companies, such as MicroStrategy (likely referred to as ‘Strategy’ and ‘Bitmine’ in the original text), from its global equity benchmark indices during the February 2026 quarterly review.
While MSCI may revisit its methodology in the future, analysts believe this decision has, in the short term, averted a significant “forced selling” scenario from passive funds. This significantly mitigates the risk of sell-offs triggered by index constituent changes, providing a much-needed reprieve for investors.
JPMorgan also directly challenges the notion that the recent correction was primarily due to a “liquidity crunch.” The analytical team clarified that market breadth indicators, which gauge the price impact of trading volumes in CME Bitcoin futures and major ETFs, show no significant signs of deteriorating market liquidity.
Instead, they argue the true catalyst for the sell-off was the panic-induced deleveraging effect that followed MSCI’s announcement in October last year, which hinted at the potential removal of “crypto-holding stocks” from its indices.
In conclusion, JPMorgan analysts’ comprehensive assessment indicates that the vast majority of position cleansing has now been completed. The data from January strongly suggests the market is currently in a “bottoming phase,” rather than at the onset of a new downtrend.
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