Crypto De-Risking Phase Nears Completion

Analysts at JPMorgan argue that the recent crypto market sell-off is likely entering a bottoming phase rather than starting a new downtrend, pointing to easing outflows from Bitcoin and Ethereum ETFs and more balanced positioning in derivatives markets.

According to the bank, most of the de-risking by both retail and institutional investors took place in the final quarter of 2025, when sentiment turned sharply lower across risk assets.

ETF Flows Turn Two-Way After Tough Quarter

Bitcoin and Ethereum ETFs suffered significant outflows in December 2025, even as global equity ETFs attracted record inflows of around 235 billion dollars, underscoring a strong rotation away from digital assets into traditional markets.

In early January 2026, flows began to stabilize, with U.S. spot Bitcoin ETFs seeing a mix of inflows and outflows that created a more two-way market rather than one-sided selling pressure.

BlackRock’s iShares Bitcoin Trust led the recovery in demand, capturing hundreds of millions of dollars in net inflows on some days as investors cautiously rebuilt exposure to Bitcoin through regulated products.

Ethereum ETFs also attracted fresh capital, signaling that interest is not limited to Bitcoin and that investors still see long-term value in the broader digital asset ecosystem.

Bitcoin Holds Near 90,000 Dollars

Bitcoin has recently traded around the 90,000 dollar mark, remaining below its latest peak near 95,000 dollars but still showing modest gains since the start of 2026.

JPMorgan notes that market liquidity in major Bitcoin products, including CME futures and leading ETFs, has not significantly deteriorated, which supports the view that the correction was driven more by positioning than by structural stress.

MSCI Decision Eases Pressure on Crypto Treasury Firms

A key catalyst behind the late-2025 sell-off was MSCI’s proposal to exclude so-called Digital Asset Treasury Companies, or DATCOs, from its global equity indexes, which raised fears of large forced selling by passive funds.

In early January 2026, MSCI decided not to remove these companies in its February 2026 index review, opting instead for a broader methodological consultation on firms that hold large non-operating assets such as Bitcoin.

The decision lifted immediate pressure from companies like Strategy (formerly MicroStrategy), one of the largest corporate holders of Bitcoin, whose shares jumped after the update as investors reassessed the risk of index-driven liquidations.

What JPMorgan Sees Going Forward

JPMorgan’s analysts highlight that ETF flows, perpetual futures data, and CME positioning all suggest that the bulk of selling has likely already taken place, reducing the probability of another sharp leg lower in the near term.

While the bank does not rule out further volatility, it views the current environment as one where long-term investors may start to re-enter the market as regulatory clarity improves and structural products like ETFs become more deeply integrated into traditional portfolios.