JPMorgan has attributed the recent sharp downturn in the cryptocurrency markets largely to activity among crypto-native and momentum-driven traders, rather than big financial institutions or long-term ETF holders. According to the bank’s latest analysis, while both Bitcoin (BTC) and Ether (ETH) declined after October 10, spot ETFs and CME futures showed relatively little forced selling. The bulk of the liquidation appears to have occurred in perpetual futures markets — a domain dominated by crypto-native players.
What Happened After October 10
Over the span of several volatile days beginning October 10, crypto markets experienced a substantial sell-off. Prices of Bitcoin and Ether fell meaningfully, prompting questions across the investment community: who was driving the drop? JPMorgan’s research team, led by Nikolaos Panigirtzoglou, examined activity across multiple venues — ETFs, regulated futures (CME), and perpetual (unregulated) futures. Their conclusion: the decline was not triggered by mass redemptions in ETFs or heavy institutional forced selling. Instead, it was leverage-unwinding among crypto-native traders that catalyzed the cascade. Below is a breakdown of the key points from JPMorgan’s report and other market observations.
ETF Flows: Small Outflows
ETFs (exchange-traded funds) have often been viewed as an on-ramp for institutional and retail capital into crypto. Because of their regulated structure and relative transparency, ETF flows are closely watched as signals of big money sentiment. JPMorgan’s data:
- Bitcoin ETFs saw net outflows of approximately $220 million. That figure corresponds to just 0.14% of their total assets under management (AUM).
- Ether (ETH) ETFs incurred higher outflows — about $370 million, or roughly 1.23% of AUM.
Though the ETH outflows are larger in percentage terms, JPMorgan frames them as still moderate, especially in the broader context of market volatility. The takeaway: ETF investors did not, on the whole, panic-sell. Their behavior was more measured. Because ETF investors tend to have longer-term perspectives and are bound by regulatory and structural constraints, they did not act as the “first domino” in the sell-off.
CME Futures
To cross-check institutional involvement, JPMorgan also looked at CME (Chicago Mercantile Exchange) futures for Bitcoin and Ether. CME futures are one of the bridges between traditional finance and crypto derivatives, and heavy forced liquidations there would suggest institutional distress.
- In Bitcoin futures, few forced liquidations were observed. JPMorgan notes that the CME BTC futures market held up relatively well, even as spot prices fell.
- In Ether futures, the selling was somewhat heavier, but still not at levels consistent with widespread institutional fire sales. JPMorgan attributes much of this to momentum-based traders scaling back risk, not large fund panic.
Thus, while some regulated futures markets showed stress, the scale was limited and does not align with what one would expect if major institutional players were rushing to exit.
Perpetual Futures
The real drama, JPMorgan argues, played out in perpetual futures — the workhorse instrument used by many crypto-native and leveraged traders. Perpetual futures differ from standard futures in that they never expire. They allow traders to hold leveraged positions indefinitely (in theory), often using margin, funding rates, and liquidations as mechanics. These are largely traded on offshore or unregulated exchanges. Key observations from the report:
- Open interest in perpetual futures for both Bitcoin and Ether fell by around 40% in dollar terms, a drop steeper than the decline in spot prices.
- This suggests forced deleveraging and mass unwinding of long positions — essentially, leveraged traders being squeezed out.
- The scale and speed of the drop in open interest point to crypto-native and momentum/leveraged traders as the primary drivers.
In simpler terms, while ETFs and CME futures remained relatively calm, the pain was concentrated in the unregulated, high-leverage corners of the market — exactly where more aggressive crypto-native traders tend to operate.
Why ETH Was Hit Harder Than BTC
One interesting nuance in JPMorgan’s analysis is that Ether (ETH) appears to have borne a greater burden of the downside pressure compared to Bitcoin. Several factors may explain this:
- Higher leverage exposure — ETH markets may have had more aggressive leverage relative to BTC, thereby magnifying losses when unwind occurred.
- Momentum strategies — ETH is often more volatile and more frequently exposed to momentum-driven trading strategies, which might have led quant or algorithmic traders to de-risk faster when volatility spiked.
- Relative liquidity and derivatives footprint — While BTC has deeper liquidity and broader institutional infrastructure, ETH derivatives markets may be more exposed to crypto-native platforms, making them more vulnerable to leverage cascades.
JPMorgan’s data — in which ETH ETFs saw higher percentage outflows and ETH perpetuals showed similarly steep drops in open interest — supports the view that ETH was more fragile in this environment.
Final Thoughts
JPMorgan’s analysis offers a compelling reinterpretation of the recent crypto downturn. Rather than painting it as a systemic collapse triggered by institutional panic, the report argues the crash was self-inflicted, driven by leveraged crypto-native traders forced to unwind in perpetual markets. Meanwhile, ETF investors and CME futures participants largely stayed on the sidelines, providing a stabilizing backdrop. While this interpretation does not negate the severity of the sell-off, it reframes the narrative — from mass institutional exit to a deleveraging-induced cascade. For anyone watching the evolving crypto ecosystem, it underscores the rising importance of leverage structures, derivative risk, and market segmentation between regulated vs. unregulated venues. As the markets settle, all eyes will be on whether leverage rebuilds too quickly, if capital returns via regulated conduits, and whether longer-term holders continue to act as stabilizing stakes in turbulent seas.
Disclaimer: CryptopianNews shares this for learning and info only. It’s not meant to be financial or investment advice. Crypto markets change a lot and move quickly. Investing in them can be risky. You should always look into things yourself. Talk to a trained financial advisor before making any choices about investing.
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