JPMorgan analysts have pinpointed retail investors as the driving force behind the recent downturn in the cryptocurrency market, according to BlockBeats. This decline, particularly evident in Bitcoin’s fall below the bank’s estimated production cost/support level of $94,000, has been fueled by selling from retail investors rather than crypto-focused traders. A report released on Wednesday from JPMorgan Managing Director Nikolaos Panigirtzoglou and his team highlights this trend.
The analysts observed that while crypto-native investors contributed to the market pullback in October through significant deleveraging, particularly within perpetual contracts, this trend stabilized in November. However, the ongoing decline this month is primarily attributed to non-crypto investors, specifically those entering the market via Bitcoin and Ethereum spot ETFs. As of now, retail investors have withdrawn approximately $4 billion from these ETFs so far this month, exceeding the historical record net outflow seen in February. This behavior contrasts sharply with retail investors’ activity in the stock market, where they invested around $96 billion into stock ETFs, including leveraged products, in November.
If this trend continues, it could reach a staggering $160 billion by the end of the month, aligning with levels seen in September and October. The analysts also point out that retail investors have exhibited similar patterns of ‘divergent behavior’ throughout this year. Notably, they have significantly bought stocks while selling crypto ETFs only in February, March, and now November. This suggests a continued divergence between their views on risk assets – both stocks and cryptocurrency.