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JPMorgan analysts said on November 20 that this month’s crypto sell-off is coming from retail investors dumping a record $4 billion out of spot bitcoin and ether ETFs, more than any previous month.
The bank noted in a note to its clients that, at the same time, the same retail crowd has poured $96 billion into stock ETFs in November, on pace for $160 billion by month-end. Led by managing director Nikolaos Panigirtzoglou, JP Morgan says this signals isolated crypto fatigue rather than a wholesale departure from risk assets.
“While crypto-native investors were responsible for the crypto market correction in October via heavy deleveraging in perpetual futures, this previous deleveraging… appears to have stabilized in November,” the analysts wrote.
“Instead, it has been non-crypto investors, mostly retail investors who typically use spot bitcoin and Ethereum ETFs… that appear to have been mostly responsible for the continuation of the crypto market correction in November.”
Retail investors treat crypto and stocks as two separate buckets. They have sold bitcoin and ether ETFs heavily in only three months this year (February, March, and November), while continuing to buy equities aggressively.
The $4 billion exodus from spot bitcoin and ether ETFs marks the heaviest monthly drain yet, brought to the fore by bitcoin’s breach of JPMorgan’s $94,000 production-cost support level.
Yet this does not spell bearishness across risk assets, according to the bank: “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.”
Data from the Options Clearing Corporation shows a recent drop in weekly call-option purchases by small retail accounts, alongside a slowdown in momentum trades for single-stock baskets popular with U.S. investors. This “downshifting” merely reverses October’s speculative surge, without putting a stop to the broader uptrend that began in 2023.
Crypto-native traders, meanwhile, have ceased their October unwind in perpetual futures, choosing instead to stabilize leverage after the month’s initial correction.
Bitcoin’s price action remains closely tied to small-cap technology stocks, particularly the Russell 2000 technology sector. This is showing a pattern of shared exposure to venture capital and early-stage innovation bets.
The correlation has persisted across multiple cycles, further underlining crypto’s role as a high-beta play on growth equities.
Bitcoin traded at $90,900 on November 21, down 4.98% on the day amid the ongoing pressure. For investors, JPMorgan’s analysis suggests the dip may prove to be tactical. With retail’s temporary withdrawal coming against a backdrop of sustained equity enthusiasm, it could potentially set up inflows once sentiment is back to base.
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