Crypto Trading Dried Up Last Month, JPMorgan Says — Spot, Derivatives and Stablecoins All Slid

JPMorgan Chase (JPM) analysts say trading in crypto markets thinned sharply last month. Activity fell across the board — spot trading, futures and options, and even the stablecoin transactions that often anchor on-chain flows. At the same time, U.S. exchange-traded products tied to crypto saw notable outflows. For investors, the short version is simple: liquidity is worse, hedging costs will rise, and price moves could become jumpier when news breaks.

Where the Drop Showed Up First and Most

JPMorgan’s research note, reported this week, breaks the slowdown into familiar pieces. Bitcoin and ether volumes weakened month-on-month and were well below year-ago levels. The bank highlights that spot trading — where people buy and sell the actual coins — contracted meaningfully, while derivatives markets, which normally account for the bulk of crypto activity, also cooled.

To put it plainly: both the cash market (spot) and the bet-like market (futures/options) lost momentum. Stablecoin activity, which often fuels quick on-chain moves and arbitrage, showed a drop too. That matters because stablecoins act like the plumbing between exchanges and DeFi apps; when that plumbing is clogged, trades slow or cost more to execute.

JPMorgan’s note points to broad-based weakness rather than an isolated glitch. Bitcoin trades were lower compared with the prior month, and ether showed a similar trend. Major altcoins followed suit, with the smaller markets hit even harder. The bank flags that the steepest declines appeared in venues and regions that had previously driven retail churn — places where short-lived, high-frequency trading is common. In contrast, some institutional venues held up a bit better but could not make up the gap.

U.S. Crypto ETPs Saw Big Withdrawals — Who Was Leaving?

One clear sign of investor nervousness was the flow into and out of U.S. crypto exchange-traded products (ETPs). JPMorgan highlights that these products experienced sizeable outflows last month after a period of inflows earlier in the year. The withdrawals were concentrated in the largest, most liquid ETPs, suggesting both retail and some institutional investors pulled money.

Compared with prior months, the pace of redemptions stands out. Earlier this year, ETPs acted as a stable bridge for new capital into the market; last month they became a route out. JPMorgan notes that flagship products — the ones most visible to retail investors — saw the largest gross withdrawals, which pushed asset bases down and made remaining shares slightly less liquid in turn.

The bank also points to a shift in the mix of who is trading. Where retail-driven volume fell fastest, some institutional desks that usually provide steady flow scaled back market-making and directional exposure. That left a thinner pool of buyers and sellers, amplifying near-term price sensitivity to new orders.

Why Volumes Fell: Macro Pressure and Crypto-Specific Forces

Several forces came together to sap activity. First, macro pressure: higher rates and weaker risk appetite in broad markets reduce capital chasing speculative assets. When stocks sell off or yields rise, crypto often loses its shine for leveraged traders and marginal buyers.

Second, crypto-specific headlines and liquidity dynamics mattered. Periodic liquidity strains on certain venues and concerns about counterparty credit can make big traders pull back. Stablecoin redemption worries — even if they don’t become full-blown crises — can slow on-chain transfers and reduce arbitrage, which historically boosts volume.

Third, derivatives dynamics changed. With lower implied volatility and thinner order books, funding costs and bid-ask spreads in futures widened relative to recent months. That raises the cost of leverage and discourages short-term directional trades that depend on cheap carry and tight spreads.

JPMorgan’s view combines those threads: macro headwinds cut demand, crypto plumbing constraints choked routine flows, and derivatives market mechanics raised costs for active traders.

What Lower Volumes Mean for Traders, Liquidity and Risk

For investors and traders, the practical consequence is less predictable execution. Thinner markets mean wider spreads and worse fills; large orders can move prices more. Hedging becomes more expensive, and margin calls are likelier to cascade in a sharp move because there are fewer counterparties to absorb stress.

From a portfolio stance, JPMorgan’s findings imply heightened risk for anyone using leverage or relying on tight spreads. Passive investors in ETPs face a separate issue: shrinking asset bases can make those products less efficient and potentially more volatile around redemptions.

Watch the following: funding rates in futures, quoted bid-ask spreads on major venues, stablecoin on-chain transfer volumes, and continuing ETP flows. If these indicators keep weakening, expect more choppy price action rather than steady trends.

Methodology Notes, Limits and What to Watch Next

JPMorgan’s note covers the most recent month and draws on exchange data, on-chain activity, and ETP flow records. The bank cautions that some off-exchange and peer-to-peer trades are hard to capture, and regional reporting differences can skew short-term comparisons.

Investors should treat the findings as a timely snapshot, not a permanent verdict. The sensible next data points to watch are weekly ETP flows, funding-rate behavior in derivatives, and stablecoin redemptions or minting trends. Market-moving macro events — central bank remarks or sudden credit stresses — will likely determine whether the slowdown is temporary or the start of a longer liquidity squeeze.

Overall, JPMorgan’s note is a clear warning: crypto markets got thinner fast, and that makes the space riskier for anyone who relies on steady liquidity or cheap leverage.

Sources

• coindesk.com