JPMorgan blames crypto slump on massive outflows from Bitcoin and Ethereum ETFs, with nearly $4 billion withdrawn by retail investors in November.
Individual investors are selling their crypto ETFs while simultaneously injecting nearly $96 billion into stock ETFs, confirming a sectoral rotation rather than a risk-off scenario.
The correlation between crypto and stocks remains strong, and the current correction appears to be a tactical rebalancing by retail rather than a deep macro shift.
JPMorgan points the finger at the culprit of the moment. The massive outflows from Bitcoin and Ethereum ETFs pushed by individual investors explain most of the ongoing correction in the crypto market. In just November alone, nearly $4 billion left these investment vehicles. This negative flow is of rare magnitude, already surpassing the previous record in February.
The timing doesn’t help. The drop of Bitcoin below the $94,000 threshold, considered by JPMorgan as a key level related to production costs, increased the pressure. The breach of this level triggered a wave of sales unrelated to the native crypto traders’ capitulation seen in October. This time, the sell-off comes from elsewhere.
Retail Investors in ‘Sell’ Mode, But Only in Crypto?
The group’s analysts, led by Nikolaos Panigirtzoglou, explain that the dynamic is not a general movement towards caution. Quite the contrary. While individual investors liquidate their crypto ETFs, they are simultaneously injecting nearly $96 billion into stock ETFs.
This contrast is striking. If the pace continues, November will show over $160 billion in net inflows into stock ETFs, a level equivalent to that of September and October. Individuals are buying risk, but not in crypto. They clearly separate their allocations, as if they were two different universes despite their common volatile profile.
This sectoral rupture has only appeared three times this year: February, March, and now November. Each time, the pattern remains the same. Targeted decline in Bitcoin and Ethereum ETFs, simultaneous surge in stock ETFs. A behavior that confirms that the current sell-off should not be interpreted as a general disengagement from risky assets.
A Persistent Correlation Between Stocks and Crypto
Despite this tactical divergence, the underlying link between crypto and stock markets has not collapsed. JPMorgan points out that the correlation remains strong, especially with small-cap tech stocks. The tech-heavy Russell 2000 continues to move in sync with Bitcoin.
Even the most speculative segments of the stock market send a similar message. The frantic buying of call options by small investors, a key indicator of risk appetite, has calmed down in recent weeks. However, nothing dramatic. This pause is just erasing the previous month’s excessive optimism without questioning the upward trend initiated since 2023.
An Isolated Crypto Correction, Not a Macro Turning Point?
The message from JPMorgan is clear. The historic outflows from crypto ETFs should not be mistaken for a general flight to safety. Retail investors remain heavily exposed to stocks, confirming that the pressure on Bitcoin and Ethereum is more of a tactical rebalancing than a regime change.
In other words: according to JPMorgan analysts, the crypto market is going through a rough patch, but the risk-taking machine is still running full throttle on the stock side.
