Cyclical Shift Under Institutional Consensus: JPMorgan’s “Open Card” Reveals the Crypto Market’s Evolution Path Over the Next 18 Months
When JPMorgan’s strategy report—regarded as an “open card” by the industry—surfaced, the narrative logic of the entire digital asset market quietly underwent a critical pivot. The core value of this report isn’t in its conclusions per se, but in how it, for the first time, presents the fundamental thinking model of a major TradFi giant—from “event-driven” to “cycle pricing”—directly to crypto market participants. What we’re seeing is not just a profit-taking warning for US equities, but a precise script about liquidity migration, risk appetite restructuring, and asset class rotation.
1. The “Death Pricing” of Rate Cut Expectations: When Good News Turns Into Bad News
JPMorgan points out that “rate cut expectations are fully priced in.” This is not subjective speculation, but validated by multi-dimensional market microstructure analysis:
Quantitative indicators: Over the past 90 days, the Nasdaq 100 rebounded 18.7%, S&P 500 recovered 12.3%, Bitcoin soared from $73,000 to a high of $93,000 (up to 27.4%), and ETH rose 35% in the same period. The speed at which risk asset prices recovered far outpaced fundamental economic improvements, with the implied risk premium down to 78% of its 2021 bull market peak. ETFs continued to attract inflows (net inflows of $8.7 billion in November), and macro sentiment has shifted completely from “hard landing panic” to “soft landing faith.”
Behavioral finance explanation: Market participants have developed a “rate cut = price rally” conditioned reflex. Once this consensus hits a threshold (bullish sentiment index at 82%), any positive news has zero marginal effect and instead triggers the classic “buy the rumor, sell the news” play. Institutional funds—especially portfolio funds managing over $10 billion—must complete “return locking” before year-end to optimize annual reporting, a structural rebalancing pressure unrelated to fundamentals.
Liquidity redistribution mechanism: At this point, the core market tension shifts from “is there any good news” to “where does capital go after good news is realized.” Funds aren’t leaving the market, but rotating among risk tiers. This is the deeper meaning behind JPMorgan’s “US equities profit-taking” alert—risk appetite hasn’t disappeared, it just needs a new vehicle.
2. The “Crypto Paradox” of US Equity Pullbacks: Why Do Risk Asset Declines Benefit BTC?
This logic may seem counterintuitive, but history has repeatedly validated it. The core lies in the style differences of risk capital and the asymmetry among asset classes:
US equities capital behavioral patterns:
- Year-end profit locking: Mutual funds and pensions operate on a calendar-year assessment cycle, requiring reduced volatility and realized gains in December.
- Post-earnings pullback: After Q4 tech earnings (January 2026), with expectations already priced in, there’s often a “good news exhausted” sell-off.
- Portfolio rebalancing: Capital rotates from the overbought Magnificent 7 tech stocks to other sectors.
BTC capital’s underlying logic:
- Macro timing window: BTC’s sensitivity to real rates (TIPS yields) is 1.8x that of US equities, with greater upside elasticity during rate cut cycles.
- Risk exposure increase: When US equity volatility (VIX) rises above 20, institutions increase “asymmetric asset” hedges; BTC, with its low correlation to US equities (0.3-0.4), becomes a top choice.
- Liquidity spillover effect: When US equities pause, risk capital doesn’t leave the market but seeks higher payoff arenas—this is the historical script of the “independent crypto bull” runs in Dec 2017, Mar 2020, and Jan 2024.
Current environment’s uniqueness: This US equity pullback will coincide with Bitcoin ETF options expiry (Dec 27), creating a timing resonance. As US equity funds exit and derivatives markets deleverage, BTC could see a sharp 5%-8% pullback within 48 hours, flushing out the last weak hands and clearing the way for the main uptrend.
3. Four Pillars for the Midterm Bull Case: What Has JPMorgan Circled on the 2026 Calendar?
JPMorgan’s optimism is not grounded in short-term sentiment, but in the confirmation of four key macro puzzle pieces for 2026:
Pillar 1: Prolonged Dovish Commitment by the Fed
Barclays forecasts three rate cuts in 2025, with further cuts in 2026 bringing long-term rates to 3%. This means a real negative rate environment will persist for at least 18 months. For BTC, this is the most favorable macro backdrop—when cash yields fall below 2%, the store-of-value narrative’s appeal rises exponentially.
Pillar 2: Structurally Depressed Energy Prices
International oil prices, pressured by weak global demand and oversupply, are expected to stay in the $65-$70 range in H1 2026. This eliminates the last inflation risk, giving the Fed room to maintain loose policy. While the crypto market’s anti-inflation narrative may temporarily weaken, the liquidity premium narrative will dominate.
Pillar 3: “Goldilocks” Wage Growth
US average wage growth is slowing to 3.8%, avoiding both stagflation fears and social unrest. This mild financial environment is ideal for a slow-burn risk asset bull market. Historical data shows when wage growth stays in the 3.5%-4% range, BTC’s annualized return hits 89%, far outpacing other periods.
Pillar 4: Global Synchronized Stimulus Cycle in 2026
JPMorgan, Russell, and Barclays’ consensus is built on four expectations:
- Trade uncertainty eases: US-China Phase 1 deal review ends, tariff barriers improve marginally.
- Asian economic rebound: China ramps up fiscal stimulus, Japan’s yen devaluation post-YCC exit boosts exports, Korea’s semiconductor cycle recovers.
- Eurozone fiscal expansion: Germany lifts “debt brake,” EU’s €750 billion recovery fund is fully deployed.
- AI enters industrial cycle: Shift from training chips to inference applications, compute demand moves to edge devices, boosting manufacturing PMI.
The resonance of these four engines is projected to lift global M2 growth from 4.2% to 6.5%, spilling $280-350 billion into the crypto market. BTC’s next major uptrend will be embedded in this macro context.
4. Timeline Projection: The Three-Act Structure of the Institutional Playbook
Based on the above logic, the evolution path for the next 18 months is quite clear:
Short Term (Dec 2024 – Jan 2025): Profit-Taking Window
- Drivers: Year-end rebalancing, ETF option settlements, FOMC cyclical pullback
- BTC: Range-bound between $86,000-$95,000, volatility spikes to 55%-65%
- ETH: Consolidates at $2,850-$3,250, waiting for BTC to stabilize
- Strategy: Reduce positions to 40%, hold cash, accumulate in batches near $86,000/$2,850 support
Mid Term (Mar 2025 – Sep 2025): Liquidity-Driven Main Uptrend
- Drivers: Fed cuts rates in March and June, RRP drops below $500 billion, liquidity overflow accelerates
- BTC: Breaks $100,000, targets $130,000-$150,000, driven mainly by institutional allocation demand
- ETH: Lags BTC by 4-6 weeks, targets $4,500-$5,500, Layer2 fee reductions and staking narrative ferment
- Strategy: Raise positions to 70%, focus on BTC (60%), supplement with ETH (30%), 10% in flexible capital
Long Term (Q1-Q3 2026): Global Economic Synchronized Boom
- Drivers: Fiscal stimulus fully in place, AI applications trigger compute demand boom, sovereign wealth fund inflows
- BTC: Challenges $180,000-$220,000, becoming the “digital gold” of mainstream asset allocation
- ETH: Surges to $8,000-$10,000, becomes the foundational settlement layer for decentralized finance
- Altcoins: AI, RWA, modular L1s, DePIN and other sectors see beta surges, leading projects could gain 10-20x
- Strategy: Gradually take profits on BTC/ETH, rotate 30% into high-growth sectors, lock in late-bull profits
5. Asset Impact Matrix: Differentiated Opportunities in BTC, ETH, and Altcoins
BTC: Short-Term Volatility, Mid-Term Strength, Long-Term Outperformance
Short term: May see 5%-8% pullbacks around FOMC events, but this won’t change the bull market trajectory—instead, it expands the main uptrend room. Every dip below $90,000 is a covert institutional accumulation. Key support at $85,000 (ETF average cost), major resistance at $102,000 (psychological level).
Mid term: After the March rate cut is confirmed, the main uptrend ignites. Drivers are quarterly rebalancing by pensions/insurers and corporate treasury allocation demand. Expected daily ETF inflows rise from $200-300 million to $500-800 million.
Long term: As the global economy restarts in 2026, BTC will display its antifragility—when TradFi is pressured by debt, its “non-sovereign asset” property will be amplified.
ETH: Waiting for BTC Volatility to End Before Its Run
Technical catalysts:
- PeerDAS completion: Data availability sampling cuts Layer2 costs by 60%
- L2 fee reductions: Base, Arbitrum gas fees fall below $0.01, user growth accelerates
- Stripe stablecoin payments: USDC issuer Circle integrates with Stripe, bringing 10-20 million new users
- ETH ETF expectations: Spot ETF approval expected Q2 2025, unlocking institutional inflows
Timing: ETH’s main uptrend lags BTC by 4-6 weeks but packs more punch. Once BTC stabilizes above $100,000, capital overflows to ETH, with the ETH/BTC ratio rebounding from 0.034 to above 0.045—implying ETH will outpace BTC by 30%-40%.
Altcoins: Beta Explosion Along the Rate Path
2025 will be the “singularity moment” for altcoins. As rates drop consecutively, risk capital will flow along the “BTC → ETH → blue-chip DeFi → emerging narratives” path. Focus on:
- AI sector: Decentralized compute networks like TAO, RNDR, AKT, benefiting from rising AI inference demand
- RWA sector: Tokenized treasury protocols like Ondo, MPL, capturing real-world asset on-chain gains
- Modular L1s: Data availability layers like TIA, DYM, becoming ETH’s scaling foundation
- DePIN sector: Decentralized physical networks like HNT, MOBILE, connecting physical and crypto economies
These sectors could see 5-10x market cap growth as rates fall below 3%, but beware of regulatory crackdowns after Q3 2026.
6. Strategic Conclusion: Understanding Institutional Rhythm Is 100x More Important Than Price Prediction
JPMorgan’s “open card” reveals a harsh truth: the trend isn’t over, it’s entering a “rotation cycle.” The three-act structure of short-term washout, mid-term bull, and long-term uptrend aligns perfectly with Barclays’ rate cut path and Russell’s rate forecasts. Three top institutions, using different languages, are telling the same story: 2025 is for positioning; 2026 is for harvesting.
For retail investors, understanding this story means:
1. Let go of December get-rich-quick fantasies, accept the reality of volatility and shakeouts, and treat every dip as a strategic accumulation opportunity
2. Build a “core-satellite-speculative” portfolio: use BTC/ETH for beta, capture alpha with altcoins
3. Strictly follow the timeline: light positions and observe in Jan-Feb, gradually increase in Mar-Jun, hold through Jul-Sep, gradually take profits Oct-Dec
This is not the end, but a deep breath before the beginning. Institutions are waiting for retail panic; retail is waiting for institutions to lift the market. The truly sober are using this breathing window to optimize cost, strengthen positions, and wait for the wind.
Facing the 2025-2026 institutional script, what’s your asset allocation strategy?
A. Heavy BTC/ETH, ignore altcoin swings
B. Balanced allocation, 70% core assets + 30% high-beta sectors
C. Focus on altcoins, betting on a 2025 narrative explosion
D. Wait for the January pullback to end before entering, avoid short-term shakeouts
After voting, please explain your logic. The most-liked comment will win the “2025 Crypto Market Institutional Fund Flow Tracker.”
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