"Cryptocurrency sell-off tide subsides" Market signals of stabilization emerge, JPMorgan: The worst phase has passed

The cryptocurrency market, after experiencing intense volatility at the end of last year, is now signaling a clear bottoming out. According to the latest analysis by JPMorgan Chase, multiple market indicators have begun to point simultaneously toward the bottom region, suggesting that the peak of panic selling among investors has already passed. The analysis team at this leading global investment bank notes that from capital flows, chip allocations, to derivatives market positions, all tell the same story: the market is gradually stabilizing.

ETF Capital Stabilizes, Peak Selling Pressure Has Passed

By the end of 2025, the global financial markets experienced extreme divergence, with net inflows into stock ETFs reaching a record high of $235 billion, while cryptocurrency spot ETFs faced ongoing redemption pressures. During this period, Bitcoin and Ethereum both fell into a downtrend, with investors significantly reducing their crypto holdings before the year’s end, leading to increased market volatility and a washout of positions.

After January 2026, the situation began to change. Capital flows into Bitcoin and Ethereum ETFs stabilized, which is an important sign of market bottoming. Led by Nikolaos Panigirtzoglou, JPMorgan’s analyst team emphasizes that selling pressure has waned, and capital outflows have eased, indicating that investors’ panic emotions are gradually receding.

Chip Accumulation Indicates Bottoming Signs

In addition to cash flows in the spot market, the derivatives sector also reveals similar signals. By observing changes in positions in perpetual contracts and CME futures, it can be seen that both retail and institutional investors have largely completed the “de-risking” cycle of Q4 last year. The accumulation and stabilization of positions are often key precursors to market turning points, which is why JPMorgan judges that the bottoming signals have already emerged.

The analyst team points out that, whether from perpetual contract markets or CME futures position indicators, the data for January show signs of a bottom, further confirming from a technical perspective that the market is in a bottoming phase.

MSCI Decision Offers Breathing Room

The latest decision by index giant MSCI provides additional support for the market. MSCI has decided that in its quarterly adjustment in February 2026, it will temporarily not remove companies like Strategy, Bitmine, and others holding significant amounts of crypto assets from the global equity benchmark index. This decision temporarily alleviates concerns about passive funds being “forced to sell,” significantly reducing the chain reaction of selling risks caused by index component adjustments.

Regarding the market’s claims of “liquidity exhaustion,” JPMorgan also offers rebuttal. Indicators measuring market breadth show that the trading depth of CME Bitcoin futures and major ETFs has not deteriorated, and market liquidity is not the core issue. The real culprit behind the sell-offs stems from the panic de-leveraging triggered by MSCI’s announcement last October about potentially removing “hodl stocks,” which caused widespread fear and liquidation.

Multiple Bottoming Signals Point to Market Bottom

By synthesizing multiple dimensions—capital flows, chip accumulation, index decision-making—JPMorgan’s conclusion is quite convincing: most of the position washout has been completed, and the market is no longer in a liquidity crisis. The simultaneous appearance of various bottoming signals in January strongly suggests that the market is in a bottoming phase rather than the start of a new downtrend. For market participants, this means that the oversold opportunities created by panic selling may soon dissipate.