JPMorgan analysts have attributed the recent sharp decline in the cryptocurrency market to crypto-native investors, as the sector experienced its largest single-day liquidation on record. Last Friday, approximately $19 billion in leveraged positions were liquidated, significantly impacting the market.
According to a report led by analyst Nikolaos Panigirtzoglou, the downturn was primarily driven by trading activities from crypto-native individuals rather than institutional investors or retail holders of exchange-traded funds (ETFs). The analysis emphasizes that while retail trading platforms faced substantial outflows, institutional products remained largely insulated from the market turbulence.
The report highlighted that spot Bitcoin ETFs saw only modest outflows of $220 million from Friday to Tuesday. In contrast, Ethereum ETFs recorded higher net outflows of $370 million during the same period. These figures suggest that institutional investors maintained a level of resilience amid the volatility.
Data from CME Bitcoin futures further supports this assertion, showing minimal liquidations during the market slump. By contrast, CME Ethereum futures exhibited greater deleveraging, which the analysts attributed to “greater de-risking” among momentum-driven traders, including commodity trading advisors and quantitative funds.
Last Friday’s liquidation event was triggered by comments from US President Donald Trump regarding tariffs, which contributed to a significant sell-off across major cryptocurrencies. Bitcoin, Ethereum, and various altcoins dropped sharply, with Bitcoin falling over 2% and reaching a low of $108,000. Other cryptocurrencies also faced declines, with Ethereum, XRP, and Solana dropping 3%, 4%, and 5%, respectively.
The impact of this wave of liquidations was pronounced, resulting in a nearly 40% plunge in open interest for Bitcoin and Ethereum perpetual contracts in dollar terms, a decline that exceeded the price drops of these assets. This trend underscores the significant role of crypto-native investors in driving the recent market selloff, while traditional participants utilizing CME futures or crypto ETFs largely remained on the sidelines.
The developments in the crypto market reflect ongoing volatility and investor sentiment, indicating that while institutional investors may have navigated the recent turbulence with relative ease, retail and crypto-native traders faced more severe consequences. As the market continues to evolve, the dynamics between these different investor groups will be crucial in shaping future trends.