The latest crypto market correction — intensified by bitcoin’s slide below JPMorgan’s estimated production cost or support level of $94,000 — is being driven mainly by retail selling of spot bitcoin and ether ETFs rather than crypto-native traders, according to the bank’s analysts.
"While crypto native investors were responsible for the crypto market correction in October via heavy deleveraging in perpetual futures, this previous deleveraging in perpetual futures appears to have stabilised in November," the JPMorgan analysts led by managing director Nikolaos Panigirtzoglou said in a Wednesday report. "Instead, it has been non-crypto investors, mostly retail investors who typically use spot bitcoin and Ethereum ETFs to invest in the crypto market, that appear to have been mostly responsible for the continuation of the crypto market correction in November."
Roughly $4 billion has been pulled from spot BTC and ETH ETFs so far this month, already exceeding February’s record outflows, the analysts said.
That behavior stands in sharp contrast to retail inflows into equities. Retail investors have already put about $96 billion into equity ETFs in November — including leveraged products — a pace that would reach roughly $160 billion if maintained through month-end, matching September and October, according to the analysts.
They said retail has shown this same split before: strong equity buying, but crypto ETF selling is limited to just three months this year — February, March, and now November. That suggests retail investors still treat crypto and equities as separate buckets, even if both are risk assets.
"It would thus be a mistake to extrapolate the selling of crypto ETFs as a signal that retail investors are turning bearish on risk assets more broadly including equities," the analysts wrote.
They also said the long-running correlation between crypto and equities remains intact. The crypto market continues to trade most closely with small-cap tech stocks — specifically the Russell 2000 tech sector — reflecting crypto’s ties to early-stage innovation and venture-driven investor bases.
At the same time, the analysts said the most speculative part of retail — traders active in call options or single-stock momentum — has stepped back in recent weeks. Data from the Options Clearing Corporation shows a drop in weekly call-option buying by small retail accounts, and baskets of stocks popular with U.S. retail traders show a similar slowdown.
"That said, this recent downshifting has merely reversed the speculative impulse of the previous month and not changed the uptrend since 2023," the analysts noted.
Overall, they said the current crypto ETF selling should not be read as broader risk-off behavior, noting that retail investors are still buying equities aggressively — just not crypto this month.
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