Retail Investors Drive Recent Crypto Market Decline, Says JPMorgan

According to BlockBeats, JPMorgan analysts have identified retail investors as the primary force behind the recent downturn in the cryptocurrency market. This decline, particularly marked by Bitcoin falling below the bank's estimated production cost/support level of $94,000, has been exacerbated by the selling of Bitcoin and Ethereum spot ETFs by retail investors, rather than crypto-native traders. In a report released on Wednesday, JPMorgan Managing Director Nikolaos Panigirtzoglou and his team noted that while crypto-native investors contributed to the market pullback in October through significant deleveraging, especially in perpetual contracts, this trend appeared to stabilize in November. Instead, the continued market decline this month has been driven mainly by non-crypto investors, particularly those entering the crypto market via Bitcoin and Ethereum spot ETFs. The analysts highlighted that retail investors have withdrawn approximately $4 billion from Bitcoin and Ethereum spot ETFs so far this month, surpassing the historical record net outflow seen in February. This behavior contrasts sharply with retail investors' activity in the stock market, where they have invested around $96 billion into stock ETFs, including leveraged products, in November. If this pace continues, the total could reach $160 billion by the end of the month, aligning with levels seen in September and October. The analysts also pointed out that retail investors have previously exhibited similar 'divergent behavior,' strongly buying stocks while selling crypto ETFs in only a few months this year, specifically February, March, and now November. This indicates that retail investors continue to view crypto assets and stocks as two distinct asset baskets, despite both being considered risk assets.