- JPMorgan says crypto perpetual futures remain dominated by speculative traders, with little demand from institutions.
- The bank argues traditional futures offer better hedging tools, pricing transparency, and settlement options.
- Despite skepticism toward crypto perps, JPMorgan is expanding tokenized deposits and blockchain services.
JPMorgan says institutional investors remain largely on the sidelines when it comes to cryptocurrency perpetual futures, even though the contracts dominate digital asset derivatives trading.
In a report released Monday, the Wall Street bank said conversations with clients and market participants suggested that perpetual futures are used mainly for leveraged speculation rather than by institutions or businesses seeking to hedge risk. The bank said traditional derivatives remain a better fit for most institutional trading needs.
JPMorgan analysts wrote, “Our due diligence within J.P. Morgan suggests that there is no/limited institutional demand that our desks are seeing.” They added, “The consensus opinion seems to be that perps activity is more akin to speculative use cases by traders versus hedging by producers/consumers or those players with real exposure to the underlying.”
The report said this is one of the reasons perpetual futures have yet to offer a compelling alternative to traditional derivatives for institutional investors.
Structural Limits Slow Adoption
JPMorgan said the popularity of perpetual futures among crypto traders has not translated into strong institutional demand. Unlike traditional futures contracts, perpetual futures have no expiration date and rely on funding payments to keep their prices close to the underlying asset. Even though they account for about 90% of crypto derivatives trading, the bank said they offer limited value for institutional investors.
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The report pointed to several drawbacks, including unbounded basis risk, the lack of forward pricing curves and limited options for physical settlement. Those limitations, JPMorgan said, make regulated futures contracts linked to established market indexes a more practical choice for commercial hedgers and institutional asset managers.
The bank also raised concerns about how concentrated trading has become in offshore perpetual futures markets. Citing public data from Hyperliquid, JPMorgan said just 12 wallets account for about half of all perpetual futures trading volume on the platform, a level of concentration that could raise questions about market liquidity and broader institutional participation.
Tokenized Deposits Gain Momentum
JPMorgan’s cautious view of perpetual futures has not slowed its broader push into blockchain technology. The bank has continued expanding its blockchain-based financial services through Kinexys, recently adding the Singapore dollar to its tokenized deposit network.
The bank has also broadened its tokenization efforts in recent months. It launched JPMD on Coinbase’s Base blockchain, offering tokenized commercial bank deposits that can earn interest, unlike stablecoins. Last December, JPMorgan introduced its tokenized money market fund, MONY, on Ethereum with an initial commitment of $100 million.
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