The crypto market is facing a fresh correction this month, and according to JPMorgan, the main trigger isn’t institutional panic — it’s retail investors off-loading spot bitcoin and ether ETFs. Analysts say this wave of selling has already surpassed previous outflow records and is weighing heavily on crypto prices, especially as bitcoin recently slipped below the bank’s estimated production cost of $94,000.
Retail Outflows Hit $4 Billion in November
JPMorgan analysts led by Nikolaos Panigirtzoglou report that retail investors have withdrawn around $4 billion from spot bitcoin and ether ETFs so far in November. This already exceeds the previous record set in February, highlighting unusually strong selling pressure in the ETF market.
The analysts note that crypto-native traders are not behind this downturn. While October’s correction was driven by heavy deleveraging in perpetual futures, that activity has stabilized in November. Instead, non-crypto investors — predominantly retail buyers who use spot BTC and ETH ETFs for market exposure — are responsible for most of the current sell-off.
Equity ETF Buying Surges Despite Crypto Weakness
In sharp contrast to crypto markets, retail investors continue to pour money into equity ETFs. Roughly $96 billion has flowed into equity-focused products this month, including leveraged ETFs. If this pace continues through month-end, inflows could reach $160 billion, matching September and October levels.
JPMorgan highlights that this kind of split isn’t new. Retail investors have sold crypto ETFs in only three months this year — February, March, and now November — even as they maintained strong equity buying. This pattern suggests that retail investors still view crypto and equities as separate risk categories, rather than part of a single risk-on/risk-off strategy.
Crypto and Equity Correlation Remains Strong
Despite the recent divergence in flows, JPMorgan says the correlation between crypto and equities remains intact. Bitcoin and Ethereum price movements continue to track closely with small-cap tech stocks, particularly those included in the Russell 2000 tech index. This reflects the crypto market’s alignment with early-stage innovation and higher-risk growth assets.
Speculative Trading Slows Among Retail Investors
The bank also notes a cooling in the most speculative pockets of retail trading. Data from the Options Clearing Corporation shows a decline in weekly call-option buying among smaller retail accounts. Similarly, baskets of single-stock momentum names popular with U.S. retail traders have seen a slowdown in activity.
Still, JPMorgan says this shift is not a structural change. The slowdown simply reverses last month’s surge in speculative behavior without disrupting the broader uptrend that has been in place since 2023.
Retail Selling Isn’t a Broader Risk-Off Signal
Overall, the bank argues that the current correction should not be interpreted as widespread fear across financial markets. While retail investors are selling crypto ETFs aggressively this month, their strong buying in equity ETFs indicates that broader risk appetite remains healthy.
For now, the crypto market downturn appears to be a retail-driven phenomenon — with bitcoin and ether ETF outflows defining the latest leg of the correction.
