Understanding the Crypto Market Correction

JPMorgan analysts reveal that the latest crypto market correction has been intensified by Bitcoin’s fall below an estimated production cost of $94,000. Interestingly, this downturn is largely attributed to retail investors offloading spot bitcoin and ether ETFs, rather than actions by crypto-native traders.

Retail Selling vs. Crypto-Native Traders

In October, the crypto market experienced a correction due to heavy deleveraging in perpetual futures by crypto-native investors. However, this trend has stabilized in November. Instead, retail investors have been the primary force behind the ongoing correction, as they have shown a preference for selling spot bitcoin and Ethereum ETFs.

This month alone, approximately $4 billion has been withdrawn from spot BTC and ETH ETFs, surpassing the record outflows seen in February. This behavior contrasts sharply with the inflows observed in equity ETFs, where retail investors have injected around $96 billion in November.

Retail Investors’ Divergent Strategies

The data indicates that retail investors continue to view crypto and equities as distinct investment categories. Despite both being risk assets, the significant divergence in investment patterns suggests that retail investors are not uniformly bearish on all risk assets. Instead, their activity in crypto ETFs has been limited to short periods, notably February, March, and now November.

JPMorgan analysts stress that the selling of crypto ETFs should not be misinterpreted as a broader bearish sentiment towards risk assets, including equities. The longstanding correlation between crypto markets and equities, particularly small-cap tech stocks, remains unchanged.

Speculative Retail Trading Trends

Interestingly, the most speculative retail traders, those active in call options or single-stock momentum, have reduced their activity in recent weeks. Data from the Options Clearing Corporation shows a decline in weekly call-option purchases by small retail accounts.

Despite this downtrend, the analysts note that it merely reverses the speculative surge from the previous month and does not alter the overall upward trend observed since 2023.

Overall, the analysts conclude that the ongoing crypto ETF selling should not be seen as a signal of broader risk-off behavior. Retail investors continue to aggressively purchase equities, indicating their ongoing interest in certain risk assets, albeit not in crypto for this particular month.

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A recent analysis by market expert Axel Adler Jr. revealed a liquidation dominance oscillator at around -11%. This negative value implies a significant leaning towards the enforced termination of bearish or short contracts.

Adler commented in a post on X that “the prevalence of short contract liquidations signifies buyer potency in the futures market.” Notably, there have been no extreme readings like the -19 seen in April 2024 or the -24 from January 2023. This suggests a bullish market momentum without the dangerous “overheating” often preceding abrupt local reversals.

Meanwhile, Bitcoin has declined by roughly 5.8% from its all-time high of $111,814 recorded on May 22. As of this report, it is trading at $105,366, virtually unchanged from the previous day. Despite a 3.2% dip over the past week, it has seen an 11.2% gain in the last month.

A report from Bitfinex on June 3 indicated that open interest in BTC options reached a peak of $49.4 billion last week before dropping to $39 billion after May 29 expiries. This mirrors the futures market trend, indicating increased institutional involvement and expectations of higher volatility.

Notwithstanding the short-term volatility, institutional conviction appears to be strengthening. Jamie Coutts, chief crypto analyst at Real Vision, highlighted that BTC is outperforming traditional risk assets on a volatility-adjusted basis. He emphasized that the rising hash rate, now at a record high, is a strong indicator of the network’s strength and resilience in the long term.

However, retail interest seems to be lukewarm. Daan Crypto Trades noted that search volume for “Bitcoin” has dipped following the post-election surge, suggesting that the current cycle is primarily driven by institutions.

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Esteemed cryptocurrency analyst, Burak Kesmeci, has unveiled some fascinating market intelligence suggesting that TRX is set to stay on an upward trajectory for some time. His insights point to an excellent accumulation opportunity in the TRX Futures Market.

In a post on May 30, Kesmeci proposed that TRX’s position is ripe for further price increases, citing changes in futures retail activity. The analyst used data from CryptoQuant to illustrate that TRX had previously hit a peak of $0.45 in December 2024. This coincided with a high level of retail speculation, as shown by a cluster of red dots on the chart.

However, during a significant market downturn that dominated the initial trimester of 2025, TRX prices plummeted to $0.21. This period saw limited retail participation in the futures market. Despite the reshaped bullish crypto market, TRX prices have climbed to approximately $0.27, with retail activity remaining neutral.

According to Kesmeci, these observations suggest substantial potential for a TRX market upswing, as retail futures activity stays cool. However, any forecasted gains are dependent on a reduction in global macroeconomic and geopolitical tensions.

Currently, TRX is trading at $0.26, reflecting a 2.87% drop in the last 24 hours. Nevertheless, the token’s daily trading volume stands at $806.98 million. CoinCodex data shows that TRX investors are remaining bullish despite recent losses, with a Fear & Greed Index of 60.

Analysts at CoinCodex forecast a return to bullish form for TRX, with predicted price targets of $0.32 and $0.29 in the next five and thirty days respectively. They also project a positive long-term outlook with a price target of $0.51 in six months.

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This viewpoint is widely shared in the crypto sphere, though it’s argued that it fluctuates among different cryptocurrencies. “The gap between the sentiment of retail and professional investors in the crypto space is incredibly vast right now,” stated Hougan in a post on February 7.

“Retail sentiment is at its lowest in years, while professional investors are extremely bullish. It feels like inhabiting two entirely different realities,” Hougan added.

The Crypto Fear and Greed Index, an indicator of overall crypto market sentiment, reflects a “Fear” rating of 44, a drop of 25 points from the previous month’s “Greed” rating of 69. James Seyffart, a Bloomberg ETF analyst, attributes this decrease to retail investors holding a plethora of altcoins and memecoins, which have suffered substantial losses. The top three memecoins by market cap have declined over 20% in the last week.

As per CoinMarketCap data, Pepe (PEPEUSD) has fallen by 35.31%, Shiba Inu (SHIBUSD) by 20.82%, and Dogecoin (DOGEUSD) by 24.69%. A crypto trader going by the pseudonym DFarmer stated, “I can’t recall a prolonged altcoin slump this severe.”

DeFi Dad, in a concurrent post, pointed out that Solana (SOLUSD) retail sentiment is “slightly more bullish than professionals,” whereas for Ether (ETHUSD), it’s the reverse. “Retail sentiment for ETH is at its all-time low—probably more bullish with professionals,” he said.

Solana has emerged as the go-to network for memecoin traders, leading to heightened retail interest. In contrast, Ether is being snapped up by the DeFi project of US President Donald Trump, World Liberty Financial, catching the eye of crypto professionals.

Trump’s victory in the November elections sparked a wider crypto surge, propelling Bitcoin to touch the $100,000 mark for the first time in December 2024. But recent global events, such as Trump’s tariffs on Canada, Mexico, and China, rattled the market, causing the biggest crypto liquidation event ever witnessed.

Even though Trump suspended the proposed tariffs on Canada and Mexico following negotiations, Bitcoin continues to trade below the crucial $100,000 psychological threshold, priced at $96,609 at the time of writing.

The post Crypto Market Sentiment: Stark Divide between Retail Investors and Professionals, Bitwise CIO Reveals appeared first on Crypto Market Insights: Dive In with CryptoUpdate.io.

“Retail investors are seizing on the debasement trade more strongly by buying bitcoin and gold ETFs,” reported Nikolaos Panigirtzoglou, Managing Director at JPMorgan, in a Wednesday note. This retail-driven impulse also extends to meme and AI tokens, which have demonstrated stronger market cap gains.

Bitcoin ETFs attracted $1.3 billion in net inflows over the past two days, totaling $4.4 billion for October alone, marking the third-largest monthly inflow since these ETFs debuted in January. This trend highlights retail investor interest in alternative assets as a hedge against currency debasement.

However, institutional investors have largely stepped back from bitcoin futures in recent weeks. “Bitcoin futures appear overbought, suggesting potential vulnerability in the near future,” noted JPMorgan, referencing CME bitcoin futures’ cumulative open interest changes.

Gold ETFs, similarly, have seen persistent retail-driven inflows. Institutional investors’ gold futures activity, however, has also hit a pause. “If a Trump victory encourages retail investors to buy risk assets and deepen the debasement trade, bitcoin and gold prices could experience significant gains,” concluded the analysts.

Earlier in October, JPMorgan projected a bullish outlook for crypto in 2025, citing an intensifying debasement trend and the potential Trump presidency.

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