"Cryptocurrency market sell-off is coming to an end" JPMorgan: Multi-dimensional indicators point to a bottom formation

After experiencing extreme market volatility at the end of 2025, cryptocurrency investors finally see a turning point. JPMorgan’s latest analysis indicates that the significant correction in the crypto market is gradually coming to an end. Led by Nikolaos Panigirtzoglou, the analyst team monitored multiple dimensions such as capital flows, holdings allocation, and derivatives markets, and found clear signs of a market bottom.

ETF Capital Reflows Shift, Signs of Stabilization Become Evident

In December last year, the global financial markets exhibited an extreme “hot stocks, cold cryptocurrencies” pattern. At that time, global equity ETFs surged by $235 billion, setting a record, while spot ETFs for Bitcoin and Ethereum experienced continuous net outflows, reflecting investors sharply reduced their crypto exposure before the end of the year.

This correction was accompanied by increased market volatility and large redemptions, leading Bitcoin to adjust by double digits from its all-time high, with competing coins falling even more sharply. After January 2026, JPMorgan analysts noted a significant change. Funds flowing into Bitcoin and Ethereum ETFs began to stabilize, indicating that the most intense phase of selling had waned, and investor confidence in crypto was gradually recovering.

Positioning Settles, Derivatives Market Shows Bottom Signals

Beyond spot ETF capital flows, the derivatives market reveals more explicit signs of stabilization. By observing changes in open interest in perpetual contracts and CME futures, both retail and institutional investors have essentially completed the large-scale deleveraging that dominated Q4 2025.

Consolidation of positions is often a key precursor to market bottoming. JPMorgan’s data shows that all indicators in January point to the market being in a bottoming phase rather than the start of a new decline. This multi-dimensional consistency provides strong support for the formation of a market bottom.

MSCI Decision Eases Panic, Crypto Assets Gain Breathing Space

Another crucial turning point in market confidence comes from the latest decision by index giant MSCI. MSCI announced that in its February 2026 quarterly review, it would temporarily refrain from removing companies like Strategy and Bitmine, which hold large amounts of crypto assets, from its global stock index benchmarks.

This decision appears technical but has profound psychological impacts on the crypto market. Concerns among investors about forced selling by passive funds have been alleviated, greatly reducing the risk of additional selling pressure caused by index component changes. Analysts believe that MSCI’s previous warning in October 2025 about potentially removing “hodl stocks” triggered panic deleveraging; now, with this uncertainty resolved, the crypto market has gained much-needed breathing room.

Liquidity Not the Main Cause, True Killers Have Disappeared

Regarding claims that “liquidity has dried up,” JPMorgan directly refutes this. The team pointed out that market breadth indicators, which measure the impact of CME Bitcoin futures and major ETF trading volumes on prices, show no significant deterioration in market liquidity. The real cause of the sell-off was the panic triggered by the MSCI controversy, which has now been successfully resolved.

JPMorgan’s comprehensive analysis concludes that most of the position cleansing has already been completed. The multidimensional data from January indicates that the crypto market is in a “bottoming phase,” not at the start of a new downtrend. This suggests that the most difficult period is over, and a recovery phase may be on the horizon.