The Quiet Turn: When “Max Pain” Starts Fading
JPMorgan just dropped a note that a lot of people have been waiting to hear: they see crypto market stability improving as Bitcoin and Ethereum ETF outflows begin to ease, and they think the bulk of the sell-off is probably behind us.[1][2][3][5][7] Translation? The de‑risking wave that nuked the market into late 2025 might be in its final innings, not the start of another 2022-style doom spiral.
They’re not calling for an instant moonshot. But they are saying ETF flows, futures positioning, and broader risk indicators are now behaving more like a bottoming phase than a structural breakdown.[1][2][3][4][5][7] If you’ve been watching BTC ETFs bleed and asking yourself “is this the end of the cycle?” - JPMorgan’s answer is closer to “it’s the end of the flush.”
Key Takeaways: Where We Really Are in This Cycle
Subscribe to our Social Media for Exclusive Crypto News and Insights 24/7!
- ETF outflows from BTC and ETH are stabilizing, with January showing “bottoming signs” after heavy December outflows.[1][2][3][5][7]
- The late‑2025 crypto dump was “de‑risking,” not a liquidity crisis - panic selling, not structural damage, according to JPMorgan.[1][2][3][5][7]
- Global equity ETFs pulled in a record ~$235B in December 2025, while crypto ETFs saw >$1B outflows - a major divergence that’s now starting to normalize.[1][2][3][5][7]
- Bitcoin and Ethereum ETF flows have turned more two‑way, with big inflows and outflows alternating instead of one‑way selling.[1][2][3][4]
- MSCI’s decision not to exclude crypto-related stocks from its global indices removed a big overhang and helped calm systemic de‑risking.[1][2][3][5]
- Derivatives data (perps and CME futures) show selling pressure easing, aligning with ETF stabilization.[1][2][3][5][7]
- JPMorgan’s analysts think the main phase of simultaneous de‑risking by retail and institutions likely ended in Q4 2025.[1][2][6]
What JPMorgan Is Really Saying (Between the Lines)
Let’s break down the core JPMorgan narrative, led by analyst Nikolaos Panigirtzoglou and team:
- They argue the crypto sell-off “may be nearing its end,” with increasing signs that the correction is “running out of steam.”[3][5][7]
- December 2025 was ugly:
- Global equity ETFs: about $235B of net inflows, an all‑time record.[1][2][3][5][7]
- Crypto ETFs (BTC + ETH): lost over $1B in assets.[3][5]
- That divergence made it feel like crypto was the kid picked last in gym class. But in January, ETF flows started to stabilize, and some products even saw rebounding inflows.[2][3][5][7]
- Their read: this was a risk‑off de‑risking phase, triggered by index and macro worries, not evidence that liquidity or market structure were breaking.[1][2][3][5][7]
Panigirtzoglou’s team explicitly pushes back on the idea that this was a “liquidity event.” They say liquidity indicators stayed within normal ranges, and that panic and de‑risking, not broken plumbing, drove the move.[3][5][7] That matters - if it’s not a structural crisis, it’s usually survivable.
And they go further: they think the phase where both retail and institutions were cutting risk at the same time probably ended in Q4 2025.[1][6] In other words, the forced sellers have mostly done their thing.
Honestly, that’s the kind of language you normally see closer to a bottom than a top.
ETF Flows: From One‑Way Bleed to Two‑Way Street
You’ve seen this before, right? One‑directional ETF flows, trend traders shorting every bounce, headlines screaming “Is Crypto Dead?” Then suddenly, the tape starts doing something different.
That’s what JPMorgan is flagging now:
- In December 2025, BTC and ETH ETFs were mostly a one‑way exit - steady outflows.[1][2][3][5][7]
- By early January 2026, those flows started showing “bottoming signs” - not huge net buying, but outflows slowing, inflows picking up, and flows becoming more balanced.[1][2][3][4][5][7]
One report highlighted:
- First two trading days of 2026:
- $1.2B flowed into Bitcoin ETFs, including a $697M single‑day spike on Jan 2, the biggest since October.[4]
- Then, $243M of outflows on Jan 3, followed by $476M on Jan 8.[4]
That’s classic two‑way flow - buyers and sellers active, not just one crowd rushing for the door.[4]
From a market microstructure perspective:
- One‑way flows = trend, panic, or capitulation.
- Two‑way flows = price discovery, more balanced risk appetite, and often the early phase of a regime change.
JPMorgan describes this as investor risk reduction “losing steam” and shifting into a more stable, less panicky regime.[4] Not full‑blown bullish euphoria. More like: “I’m done panic‑selling; now I’m thinking again.”
Futures, Perps, and Positioning: Under the Hood
JPMorgan doesn’t just look at ETFs. They also track:
- Perpetual futures markets
- CME Bitcoin futures positioning
- Other derivatives indicators tied to open interest and leverage
Their conclusion: January data shows signs of a bottom in these indicators as well.[1][2][3][5][7] Specifically:
- Perps and CME positioning suggest selling pressure is easing, not accelerating.[1][3][5][7]
- The data aligns with ETF flow stabilization - different instruments telling the same story.[1][2][3][5][7]
That’s crucial for avoiding liquidation cascades:
- When markets are heavily over‑levered one way, a sharp move triggers a chain of forced liquidations, which nukes price even further.
- When leverage and positioning reset - which they now suggest has largely happened - moves become less explosive on both sides.
One report citing liquidations data noted how recent sharp drawdowns led to heavy liquidations, but BTC held relatively stable versus the broader altcoin complex, reinforcing the idea that forced deleveraging may have done most of its work already.[5]
Back in previous cycles, you saw the same pattern:
- In mid‑2021 and mid‑2022, once leverage flushes and liquidations hit extremes, funding rates normalized, open interest reset lower, and then the market slowly ground into a base.
- JPMorgan’s message is essentially: we’re entering that kind of phase again, based on the flows and positioning they’re tracking.[1][2][3][5][7]
MSCI, Index Risk, and Why This De‑Risking Even Happened
Here’s the plot twist a lot of retail didn’t fully appreciate: this sell‑off wasn’t mainly about “crypto is over” - it was about index risk and portfolio rules.
According to JPMorgan:
- In October, MSCI announced it was reviewing the index status of MicroStrategy and crypto‑related “DAT” companies - basically hinting they could be excluded from global benchmarks.[1][2][3][5]
- That spooked the big portfolios - pension funds, asset managers, systematic strategies - and triggered what JPMorgan calls “systemic de‑risking.”[1][2][3][5]
- A lot of that de‑risking bled into BTC and ETH ETFs, as risk‑parity and multi‑asset players trimmed exposure broadly.[1][2][3][5]
Then comes the key catalyst:
- On January 7, MSCI decided not to exclude Bitcoin and crypto reserve companies from its global stock indices.[1][2][3][5]
- JPMorgan calls this “at least temporary relief” and says it helped relieve market pressure and support stabilization.[1][2][3][5]
So what happens when a big overhang like that gets removed?
- The forced or rules‑driven sellers stop selling.
- Fresh panic dries up.
- New information flow tilts neutral‑to‑positive.
That’s precisely when you start to see bottoming price action, two‑way flows, and volatility cooling off - which is what their data is showing now.[1][2][3][4][5][7]
“De‑Risking Phase Likely Over”: Why That Phrase Matters
One of the strongest lines from the JPMorgan work is that the phase of simultaneous reduction by retail and institutional investors likely concluded in Q4 2025.[1][6]
Break that down:
- Simultaneous de‑risking is brutal. Everyone’s hitting “sell” at the same time:
- Hedge funds trimming.
- Retail puking spot and perps.
- Systematic guys reducing risk exposure across asset classes.
- This syncs with:
- Crypto ETF outflows.
- Index fears (MSCI).
- Global macro uncertainty.[1][2][3][5][7]
If JPMorgan is right that this phase is mostly done:
- The marginal seller is weaker now than in November/December.
- It doesn’t mean instant pump - but it does mean the odds of another identical leg down driven by the same actors are lower.
- Future downside will likely need new catalysts (fresh macro shock, policy surprise, regulatory hit).
Their view is that current factors suggest a possible bottoming, not the start of a new decline phase.[3][5][7] That’s a subtle but meaningful shift in tone from “careful, more pain ahead” to “the worst of this particular wave is probably behind us.”
BTC & ETH Price Structure: Stability Without Euphoria
Across multiple reports, the data snapshots line up around early January:
- Bitcoin trading roughly in the $90K area, up a couple of percent week‑over‑week after the worst of the flush.[4][5]
- ETH hovering around the low $3K region with modest gains off the lows.[2][4][5]
No fireworks. No blow‑off top. But relative stability given the previous volatility. One outlet described BTC as showing “relative stability” despite broad market declines and liquidations.[5]
The vibes are familiar:
- BTC didn’t just rocket back - it stabilized, absorbed flows, and tightened up.
- ETH didn’t just drop - it swan‑dived into support and then started grinding sideways.
From a trend and ADX perspective (even if not spelled out by name in the reports, the logic is similar):
- High‑trend, high‑volatility phases (strong ADX) tend to give way to lower‑volatility consolidation as trends exhaust.
- That’s what ETF flows and futures positioning now reflect - the trend of “everyone sell crypto” is weakening.
One analyst commentary highlighted that ETF flows are now more “balanced” and that the market is “showing neither panic nor full recovery, but two‑sided trading.”[4] That’s typically what early accumulation regimes look like.
Not a Free Lunch: What Could Still Go Wrong
JPMorgan is cautiously constructive, not blind bullish. They still flag real risks:
- Crypto markets remain highly sensitive to macro shocks, especially:
- Interest rate moves
- Weak employment data
- Policy shifts by the Federal Reserve[4][5]
- One report notes that future volatility could be driven by the Fed, possible rate cuts under a new administration, and even the idea of strategic Bitcoin reserves on a state level.[5]
They also underline:
- BTC is still below its recent highs, and a renewed wave of ETF outflows could absolutely trigger another leg lower.[4]
- Investors are advised to use smaller position sizes and longer time horizons, rather than YOLOing into short‑term trades.[4]
So it’s not “load the leverage and forget stops.” It’s more like:
“The structural picture looks intact, the forced sellers are mostly done, but this market can still slap you if you size wrong.”
Expert Color and Market Mood
A few notable color quotes and takes from the coverage:
- JPMorgan researchers concluded that “the majority of the cryptocurrency sell-off is already behind us.”[3]
- They reiterate that the recent correction was driven by risk‑averse behavior after the MSCI index warning, not by deteriorating liquidity.[2][3][5][7]
- Some analysts referenced in these pieces stress that BTC is unlikely to hit a new all‑time high immediately in 2026, emphasizing a longer consolidation path rather than a straight vertical recovery.[3]
That’s a classic post‑flush environment: plenty of skepticism, limited FOMO, but improving mechanics underneath.
Imagine holding through that whole mess - watching your favorite coins draw down, hearing about MSCI kicking crypto names out, and then waking up to “oh, actually, they’re not getting excluded and the de‑risking might be over.” It’s the kind of thing that turns hardened bears into cautious swing traders again.
What This Means If You’re Positioning Now
If you’re looking at this from an investor’s lens rather than a day‑trader’s:
- Market structure looks healthier than sentiment feels.
- ETF outflows easing, two‑way flows, and calmer futures positioning are all the stuff you want to see before putting on fresh risk.[1][2][3][4][5][7]
- The huge divergence where equities took in $235B and crypto got dumped is starting to close.[1][2][3][5][7]
You don’t need to assume immediate parabolic upside. You just need to ask:
- “Is the forced‑seller phase over?”
- “Are big structural risks (like MSCI exclusion) now off the table or at least deferred?”
According to JPMorgan’s latest work, the answers are “mostly yes” and “for now, yes.”[1][2][3][5][7]
The whales ain’t sleeping, fam. They’re rotating.
Related Concepts You Might Want to Explore
- https://www.binance.com/en/square/post/01-09-2026-jpmorgan-observes-stabilization-in-bitcoin-and-ethereum-etf-flows-34829841497538
- https://www.kucoin.com/news/flash/jpmorgan-january-crypto-etf-inflows-rebound-selling-pressure-easing
- https://forklog.com/en/jpmorgan-suggests-crypto-market-sell-off-may-be-ending/amp/
- https://yellow.com/news/bitcoin-etf-flows-turn-two-way-as-jpmorgan-says-crypto-sell-off-losing-steam
- https://www.tradingkey.com/analysis/cryptocurrencies/btc/261459308-crypto-cryptocurrency-bitcoin-btc-ethereum-eth-price-fed-us-rate-tradingkey
- https://lookonchain.com/feeds/43016
- https://www.coindesk.com/markets/2026/01/08/jpmorgan-says-the-crypto-selloff-may-be-nearing-a-bottom-as-etf-outflows-ease
