JPMorgan Analysts Double Down: BTC & ETH Poised for Monumental 2026 as De-Risking Momentum Fades

Wall Street's crypto winter thaw is accelerating. JPMorgan strategists are signaling a major shift, backing Bitcoin and Ethereum for breakout performance as institutional de-risking hits the brakes.

The Risk-On Pivot

Forget the cautious whispers of last quarter. The narrative is flipping from preservation to positioning. Analysts point to a clear slowdown in the defensive portfolio maneuvers that dominated 2025. Capital isn't just sitting on the sidelines anymore—it's starting to scout for alpha, and the big two digital assets are top of the list.

Why BTC and ETH Lead the Charge

Bitcoin's resilience as a macro hedge continues to draw nods from traditional finance desks, while Ethereum's ecosystem maturation—think scaling solutions and real-world asset tokenization—frames it as the backbone for the next wave of financial infrastructure. It's not just speculation; it's a bet on foundational tech. Unlike some yield-chasing altcoins that promise the moon but deliver regulatory headaches, these assets are building concrete use cases that even skeptical CFOs can't ignore.

The Institutional Green Light

The slowdown in de-risking is the silent catalyst. It's the institutional equivalent of a deep breath before the plunge. Risk committees are getting comfortable, allocation models are being tweaked, and the once-trickle of cautious interest is poised to become a steadier flow. This isn't retail FOMO—it's calculated re-entry by players with deep pockets and longer time horizons.

The Bottom Line

JPMorgan's stance adds heavyweight validation to the crypto recovery thesis. The message is clear: the period of defensive contraction is ending, setting the stage for Bitcoin and Ethereum to reclaim center stage. For the traditional finance crowd still debating whether crypto is an asset class or an annoyance, this move might just be the nudge that turns skeptics into late-blooming believers—right in time to chase the momentum they missed. Typical.

JPMorgan analysts say MSCI’s move may improve market stability

According to current ETF data, JPMorgan believes that both retail and institutional investors may have largely completed the position reductions. It wrote, “Taken together, all these indicators suggest that the previous crypto position reduction by both retail and institutional investors during the last quarter of 2025 is likely behind us.”

The analysts added that MSCI’s decision to include crypto-related firms in its February 2026 benchmarks could largely help reinforce market stability. They contended that although MSCI intends to reassess these companies later, the current MOVE could provide firms like Strategy with some short-term relief and diminish the likelihood of mandatory selling caused by index changes.

Additionally, speaking about what drove crypto’s decline in the fourth quarter of last year, the analysts said that while deteriorating liquidity is always a factor, it was “most likely not” the cause of the recent correction.

They pointed to metrics such as market breadth and the impact of trading volumes on CME Bitcoin futures and bitcoin ETFs, concluding that liquidity issues likely didn’t cause the decline. They explained the crypto market correction was primarily driven by de-risking following MSCI’s October 10 announcement on Strategy.

They added, “The good news is that there are signs of stabilisation and bottoming out in crypto Flow and positioning indicators in January, suggesting that the previous position reduction by investors is largely behind us.”

Bitwise CIO says crypto players have moved past the October 10 liquidation event

Recently, Bitwise Chief Investment Officer Matt Hougan asserted that three conditions must be met for digital assets to reach new record levels this year, and one may already be at play.

He noted that after the market shock on October 10, investors were concerned that big hedge funds could be forced to sell, resulting in continued downward pressure. However, he said such fears seem to be subsiding, as significant position cuts are likely to have occurred before the end of the year, and early 2026 market performance indicates that the overhang is no longer dragging on investors.

Additionally, Hougan said the CLARITY Act, currently moving through Congress,  represents just part of what still needs to happen legislatively, adding that its passage WOULD be a key milestone.

He said a stable stock market backdrop is also crucial for crypto, but added that, though there isn’t a clear correlation, a steep selloff in the S&P 500 could pressure risk assets broadly. Currently, markets indicate a low probability of a recession and favorable odds for equities, but the risk cannot be entirely ruled out.

Overall, digital assets’ future is looking good, with the rise in institutional interest, stablecoins, and tokenization markets growing, and the delayed benefits of a more favorable regulatory shift that began in early 2025 manifesting.

Bitwise expects crypto’s early-year strength to continue as long as policy developments stay on track and broader markets perform well.

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