JPMorgan says crypto market crash was driven by native traders

The sharp crypto market crash last week, marked by massive liquidations, was likely fueled by crypto-native traders rather than institutional investors or retail ETF holders, according to analysts at JPMorgan. A team of analysts led by Managing Director Nikolaos Panigirtzoglou claimed in a note released on Thursday that evidence suggests a significant deleveraging event is underway within perpetual futures, a favored tool among native cryptocurrency ￰0￱ market participants trading regulated products, such as spot Bitcoin ETFs or CME futures, didn’t panic as ￰1￱ data from JPMorgan depicts the resilience of investors in exchange-traded ￰2￱ Bitcoin ETFs saw $ 220 million in outflows between October 10 and October 14, or 0.14% of their assets under ￰3￱ from Ethereum ETFs were a little higher, at $370 million (1.23% of AUM).

JPMorgan analysts said the figures suggested that ETF investors, typically retail and institutional players with longer-term horizons, did not engage in panic selling during the market ￰4￱ numbers proved that CME Bitcoin futures, a popular trading ground for institutional investors, experienced minimal liquidations during the ￰5￱ was a bit heavier in CME Ethereum futures, but this was due more to algorithmic and quantitative traders (not large funds) cutting risk in response to increased volatility, JPMorgan ￰6￱ trends, the analysts said, underscore a critical shift in the market’s structure: Institutional and regulated investors are no longer driving violent price swings.

Instead, that role has fallen back on “crypto-native” players operating in offshore and unregulated ￰7￱ futures signal sharp deleveraging Although ETFs and CME futures were holding up, perpetual futures—an instrument that enables continual leveraged betting on cryptocurrency prices—tumbled ￰8￱ interest in Bitcoin and Ethereum perpetual futures decreased by around 40% in dollar terms, exceeding the actual decline in the spot price, according to ￰9￱ sharp drop implies that traders had been forced to unwind positions as prices fell, adding momentum to the ￰10￱ analysts said the trends suggested large-scale deleveraging by so-called crypto-native investors, many of whom trade on offshore platforms with high ￰11￱ crew, rather than ETF or CME traders, was the principal driver of the liquidation cascade, they ￰12￱ correction on Friday, October 11, resulted in the liquidation of more than $20 billion in long positions from over 1.5 million traders, according to Coinglass ￰13￱ selloff was the largest liquidation event in crypto’s history, surpassing even the May 2021 ￰14￱ of the catalyst was geopolitical ￰15￱ were in turmoil after President Donald Trump announced that he would impose 100% tariffs on Chinese tech imports, triggering a wave of selling across risk assets.

Bitcoin, Ethereum, and altcoins all fell as traders sought to cover ￰16￱ the following Monday, Bitcoin had briefly fallen below $106,000 before rebounding ￰17￱ was trading near $108,500 on Friday, approximately 2.5% lower than its value over the previous 24 ￰18￱ reaffirm crypto fundamentals amid shaky sentiment Still, with the record-setting liquidation, JPMorgan said the damage is concentrated more on speculators than on longer-term ￰19￱ flows from an ETF lens are steady, and on-chain data show no major outflows from cold wallets or custodial platforms, where large long-term holders typically store their holdings. However, market sentiment remained ￰20￱ episode showed that leverage funding and momentum trading were still driving crypto markets, JPMorgan said, and that volatility was likely to remain high until more institutional engagement and oversight of offshore exchanges became ￰21￱ and analysts are now watching to see if Bitcoin can establish a foothold above $100,000, a key psychological level for many traders, and whether leveraged positions start to accumulate again in the weeks ￰22￱ seen where it ￰23￱ in Cryptopolitan Research and reach crypto’s sharpest investors and builders.