Recent market correction in crypto — which intensified as Bitcoin fell below the production cost or the $94,000 support level estimated by JPMorgan — mainly resulted from retail investors selling off Bitcoin and Ether ETFs, rather than professional traders in the crypto market, according to bank analysts.
“While professional investors were the cause of the market correction in October through aggressive leverage reduction on perpetual futures contracts, this leverage reduction appears to have stabilized by November,” said the analyst team led by CEO Nikolaos Panigirtzoglou in a Wednesday report. “Instead, it is the amateur investors, primarily individual investors using Bitcoin and Ethereum spot ETFs to invest in the crypto market, who seem to be primarily responsible for the continued market correction in November.”
Analysts noted that approximately $4 billion was withdrawn from Bitcoin and Ethereum spot ETFs just this month, surpassing the record outflows seen in February.
This behavior sharply contrasts with the trend of inflows into equities. Retail investors poured about $96 billion into stock ETFs in November — including leveraged products — and if this pace continues until the end of the month, the total will reach around $160 billion, matching the figures recorded in September and October, the analysts said.
They also pointed out that retail investors have previously shown a similar split: heavily buying stocks, but only selling crypto ETFs during three months this year — February, March, and now November. This indicates that retail investors still see crypto and stocks as two separate “buckets,” despite both being risky assets.
“Therefore, it would be a mistake to interpret the selling of crypto ETFs as a sign that retail investors are becoming pessimistic about risky assets in general, including stocks,” the analysts emphasized.
The group also noted that the long-term correlation between crypto and stocks remains intact. The crypto market continues to trade close to small-cap tech stocks — specifically the technology sector within the Russell 2000 — reflecting the link between crypto and early-stage innovation projects and venture investors.
Meanwhile, analysts observed that highly speculative retail investors — those engaging in call options or trending individual stocks — have pulled back in recent weeks. Data from the Options Clearing Corporation shows a decline in weekly call option purchases by retail accounts, and popular stock baskets among U.S. retail investors are experiencing similar slowdown.
“This simply reverses the momentum from last month’s speculation and does not change the upward trend since 2023,” the analysts noted.
Overall, they concluded that current crypto ETF selling should not be seen as a sign of overall risk aversion, as retail investors continue to actively buy stocks — they are only temporarily pausing their crypto investments this month.
Shach Sanh
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