The latest correction in the crypto market — intensified by bitcoin falling below JPMorgan’s estimated cost of production or $94,000 support level — is primarily driven by retail bitcoin and ether spot ETFs rather than crypto-native traders, according to the bank’s analysts.
“While crypto-native investors were responsible for the crypto market correction in October via strong perpetual futures deleveraging, this previous perpetual futures deleveraging appears to have stabilized in November,” JPMorgan analysts led by Managing Director Nikolaos Panigirtzoglou said in a report released Wednesday. “Instead, it is non-crypto investors, primarily retail investors who typically use Bitcoin and Ethereum spot ETFs to invest in the crypto market, who appear to have been primarily responsible for the crypto market’s continued correction in November.”
About $4 billion has been withdrawn from BTC and ETH spot ETFs so far this month, already surpassing February’s record outflows, analysts said.
This behavior contrasts sharply with the influx of individuals into stocks. Retail investors have already poured about $96 billion into stock ETFs in November — including leveraged products — a pace that would reach about $160 billion if sustained through the end of the month, or September and October, according to analysts.
They said retail has already shown the same breakdown: strong buying of stocks, but selling of crypto ETFs is limited to just three months this year – February, March and now November. This suggests that retail investors still treat cryptocurrencies and stocks as separate categories, even though both are risky assets.
“It would therefore be a mistake to extrapolate crypto ETF selling as a signal that retail investors are becoming bearish on risk assets, including stocks,” the analysts wrote.
They also said that the long-term correlation between crypto and stocks remains intact. The crypto market continues to trade more closely with small-cap tech stocks – particularly the Russell 2000 tech sector – reflecting crypto’s ties to early-stage innovation and risk-oriented investor bases.
At the same time, analysts said the most speculative part of retail trading – traders active in call options or individual stock momentum – has retreated in recent weeks. Data from the Options Clearing Corporation shows a decline in weekly call option purchases by small retail accounts, and baskets of stocks popular with U.S. retail traders show a similar slowdown.
“That said, this recent downgrade only reversed the speculative impulse of the previous month and has not changed the uptrend since 2023,” the analysts note.
Overall, they said the current sell-off in crypto ETFs should not be interpreted as broader risk-averse behavior, noting that retail investors are still buying stocks aggressively – but not crypto this month.
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