JPMorgan Says Retail Selling Is Driving Crypto Correction As Bitcoin Slides Below $82k
Retail investors unloading spot Bitcoin and Ethereum ETFs (exchange-traded funds) are driving the crypto market correction, JPMorgan said.
Analysts led by Nikolaos Panigirtzoglou said that “non-crypto investors, mostly retail investors who typically use spot Bitcoin and Ethereum ETFs to invest in the crypto market,” appear to have been mostly responsible for the ongoing correction.
But they said the selling of Bitcoin and Ethereum ETFs should not be interpreted as broader risk-off behavior because investors are still aggressively buying equities.
About $4 billion has been withdrawn from spot Bitcoin and Ethereum ETFs so far this month, they said, while retail traders have poured nearly $100 billion into ETF products in November.
“It would thus be a mistake to extrapolate the selling of crypto ETFs as a signal that retail investors are turning bearish on risk assets more broadly including equities,” they wrote.
The market correction deepened today, with Bitcoin dropping below $82K and 24-hour liquidations surpassing $2 billion.
Boomers Hold Firm
Spot BTC and ETH ETFs saw heavy withdrawals again yesterday.
Investors withdrew $903.2 million from the spot Bitcoin ETFs, just a day after the funds had managed to break their multi-days outflows streak, according to Farside Investors.
But Bloomberg ETF analyst Eric Balchunas said that “boomers” are holding firm amid the Bitcoin ETF selloff, and hold around 96.5% of the funds’ AUM.
“I was bullish [at] their holding ability but even I’m impressed as 30% drawdown is no joke,” he said.
US spot BTC ETF flows (Source: Farside Investors)
BlackRock’s IBIT, which leads in cumulative inflows, suffered the biggest outflows yesterday after investors pulled $355.5 million out of the product. All of the other spot Bitcoin ETFs, except Invesco’s BTCO, Valkyrie’s BRRR, and WisdomTree’s BTCW recorded outflows as well.
ETH ETFs extended their outflow streak to eight days after $261.6 million exited the funds yesterday. Once again, BlackRock suffered the biggest outflow of $122.6 million.
Investors Have Not Turned Risk-Off Yet
The outflows from spot Bitcoin and Ethereum ETFs stand in sharp contrast to activity for equities. So far this month, retail investors have poured approximately $96 billion into equity ETFs, including leveraged products. If this pace continues, the total inflows for equity ETFs could reach $160 billion by the end of this month, the JPMorgan analysts said.
The contrasting activity suggests that investors still treat crypto and equities as separate buckets, even while both are considered risk assets, the analysts said.
They added that the crypto market continues to trade most closely with small-cap tech stocks, specifically the Russell 2000 tech sector.
Related Articles:
About Author
About Author
