The bank's analysts estimate first-quarter flows ran at roughly one-third of last year's pace, with Strategy's bitcoin purchases and a handful of large VC rounds accounting for most of the capital that did arrive.
JPMorgan told clients on Tuesday that capital flowing into digital assets fell sharply in the first three months of 2026, with total inflows estimated at around $11 billion — an annualised pace of roughly $44 billion that sits well below 2025's record $130 billion.
The drop is steeper than it looks. Strip out Strategy's relentless bitcoin accumulation — funded largely through equity and preferred stock issuance — and concentrated venture capital rounds, and genuine investor flows were, in the bank's assessment, 'small or even negative year-to-date.' That is a remarkable admission for a market that entered the year on the back of what JPMorgan itself called a historic inflow cycle.
Spot bitcoin and ether exchange-traded funds bore the brunt of the retreat. Net outflows dominated January, driven by a combination of geopolitical anxiety and profit-taking after 2025's rally. Bitcoin ETFs clawed back some ground in March, but ether products — which had surpassed $20 billion in assets by the end of last year — continued to bleed. The total crypto market capitalisation fell roughly 20 per cent over the quarter; bitcoin dropped around 23 per cent and ether lost more than 30 per cent.
Strategy, the company formerly known as MicroStrategy, remains the single largest source of identifiable demand. The firm — which held approximately 762,000 bitcoin as of March — continued buying through the quarter, though the pace of corporate imitators has slowed considerably. Some smaller treasury firms actually sold holdings to fund buybacks, a reversal that underscores how quickly the 'bitcoin balance sheet' thesis can unravel when share prices fall.
Bitcoin miners were net sellers too, though JPMorgan characterised this as balance sheet discipline rather than distress. Firms sold coins or pledged them as collateral to cover capital expenditure and manage liabilities — a defensive posture that reflects tighter financing conditions across the sector.
Venture capital was the relative bright spot, tracking an annualised pace above the prior two years. But the concentration is telling: fewer, larger deals led by established firms, which suggests the broader VC market for crypto startups remains selective rather than exuberant. The era of seed rounds for anything with 'web3' in the pitch deck is not coming back.
The numbers sit uncomfortably alongside JPMorgan's own January forecast, in which the bank projected 2026 inflows would surpass 2025's total. Analysts led by Nikolaos Panigirtzoglou have not formally walked back that call — they remain, in their words, 'positive on crypto for the rest of the year' — but the gap between forecast and reality is now wide enough to require either a spectacular second-half recovery or a quiet revision.
There are reasons to think the money could return. The Iran ceasefire announced on Tuesday pushed bitcoin above $72,000, triggering more than $420 million in short liquidations and briefly restoring something resembling bullish sentiment. Institutional infrastructure continues to expand — Charles Schwab is preparing to launch spot trading, and Morgan Stanley's MSBT bitcoin ETF began trading on the NYSE today with an industry-low 0.14 per cent fee.
But infrastructure and access are not the same thing as demand. The ETF wrapper solved crypto's distribution problem in 2024; it did not guarantee perpetual inflows. What Q1 reveals is a market that has become heavily dependent on a single corporate buyer and a handful of large funds, while the broader base of retail and institutional investors — the cohort that was supposed to carry the next leg higher — has pulled back.
JPMorgan's report did not speculate on what it would take to reverse the trend. The data, however, speaks plainly enough: at $11 billion a quarter, the industry is running on fumes compared to the bonfire of capital that powered last year's rally.
