JPMorgan analysts warn that the crypto industry faces a potential downspell amid lower demand for top assets like Bitcoin and Ethereum. The leading cryptocurrency by market cap, BTC, is down over 6% in the past month. For ETH, the coin is down by nearly 18%. Despite the bullish market sentiment, not many cryptocurrencies have excelled on 2024 levels in 2025 thus far. Thus, JPMorgan fears that the 2025 crypto boom may not hit as hard as projected.

The total crypto market cap has declined by 15% from its record high of $3.72 trillion on Dec. 17 to around $3.17 trillion, marking a significant correction. JPMorgan analysts, led by managing director Nikolaos Panigirtzoglou, say a lack of positive catalysts and fading momentum drive lower demand for crypto futures. Specifically, CME bitcoin and ether futures are nearing “backwardation”: where futures prices fall below spot prices, mirroring last June and July, the analysts wrote.

“This is a negative development and indicative of demand weakness by those institutional investors that use regulated CME futures contracts to gain exposure into these two cryptocurrencies,” the analysts added in the report. With demand in crypto futures investments weakening, the prices of these top coins are also suffering. The analysts attribute the weakening demand for CME bitcoin and ether futures to two factors.

JPMorgan Reveals What’s Behind the Crypto Bear Market

First, some institutional investors appear to be taking profits due to a lack of immediate positive catalysts. The analysts said that major crypto-related initiatives from the new U.S. administration are unlikely before the second half of the year, leaving investors in limbo. Secondly, momentum-driven funds such as commodity trading advisors have been reducing exposure, further weighing on demand. “Both Bitcoin and Ethereum momentum signals have been downshifting over the past couple of months with the Ethereum momentum signal having shifted already into negative territory,” the report also says.

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With pressure mounting on the crypto market as a whole to deliver following plenty of optimism, top assets may not be able to withstand the high hopes. JPMorgan’s analysts are fearful that instead of booming, the crypto industry may start to show cracks. That pressure also doesn’t expect to slow in the coming months, especially with the “altcoin season” period coming as soon as March.

On the other hand, more crypto ETFs coming this year could give the industry a much-needed boost. Following the launch of spot Bitcoin/Ethereum ETFs in 2024, the market as a whole experienced a pump. That may also occur this year if assets like XRP and Litecoin receive ETF approval.