JPMorgan latest analysis suggests that the recent sharp downturn in crypto markets was driven not by traditional financial institutions, but by “crypto-native” participants. This indicates a notable shift: the participants embedded within the digital-asset ecosystem are increasingly controlling price momentum, particularly during stress episodes. Below we unpack JPMorgan’s observations, the data supporting them, and what this implies for future volatility and market structure.
According to the report by JPMorgan, Bitcoin spot ETFs and regulated Bitcoin futures markets saw only modest outflows during the sell-off. By contrast, Ethereum-linked products recorded heavier de-risking, suggesting the correction hit altcoins harder than Bitcoin. Meanwhile, the largest blow appeared in perpetual futures: open interest in both Bitcoin and Ethereum contracts collapsed by about 40%—a faster rate than the decline in spot price.
This scale of deleveraging in the derivatives space is a key indicator that leveraged positions held by traders native to the crypto markets were being unwound en masse. Because institutional players generally avoid placing highly leveraged directional bets, their positions showed relative stability during the drop, emphasizing that the sudden volatility came from within.
What JPMorgan announces in the report
JPMorgan points out that such internal-driven corrections may become more common as the crypto ecosystem grows in complexity and liquidity. When participants directly tied to digital assets drive price action, traditional risk models relying on institutional flows may lose predictive power. The report also warns that altcoins and tokens with speculative narratives could face disproportionate downside from native traders reacting to sentiment shifts.
In practical terms, the current episode suggests that care must be taken when attributing market movements to macro or institutional forces. Crypto-native liquidity — the behavior of those who live and breathe digital assets — now plays an oversized role in exacerbating volatility. For traders and investors, this means paying closer attention to derivatives flows, leverage levels, and on-chain sentiment indicators.
In summary, JPMorgan’s analysis reveals a structural evolution: the crypto market is becoming increasingly self-reflexive, with internal participants amplifying price swings. As this dynamic strengthens, understanding native trader behavior may become essential for navigating the next cycle.
