JPMorgan's latest research report has given the market a boost— the adjustment phase of cryptocurrencies is most likely nearing its end. The future will not be characterized by continued sharp declines, but rather by a gradual transition into a stable recovery period.

Why did prices fall so sharply earlier? The core reason is straightforward: at the end of the year, everyone was "cutting losses on crypto and increasing positions in stocks." The decline in Q4 last year was fundamentally driven by risk reduction strategies from institutions and retail investors. Bitcoin and Ethereum spot ETF funds experienced frantic outflows, while global stock ETFs attracted record-breaking inflows. Everyone was reallocating assets, with high-risk crypto assets being sold off first, which dragged the market down. Those days were indeed tough—Bitcoin dropped double digits from its peak, altcoins fared even worse, market volatility was intense, and short-term traders could only wander within ranges.

The good news is that a clear turning point appeared starting in January. By January 2026, various signals were indicating a bottom: the outflow of ETF funds from BTC and ETH slowed significantly, and the previous wave of aggressive deleveraging basically came to an end; the futures market also showed obvious signs of bottoming out, with both institutional and retail selling pressures diminishing. Another key factor was that MSCI officially announced that in the February index review, Bitcoin and crypto-related companies would not be excluded from the global stock indices, directly preventing passive sell-offs and injecting confidence into market sentiment.

JPMorgan also specifically refuted the view that the decline was due to liquidity shortages, pointing out that the real culprit was MSCI’s warning of exclusion in October last year. This signal prompted the market to start risk reduction early. Most of the adjustment pressure has now been released, and conditions for a rebound are gradually coming together.