JPMorgan Sees Institutional Capital Driving Crypto Recovery into 2026

JPMorgan’s analysts deliver a cautiously optimistic thesis for digital assets that centers on institutional demand reasserting itself in 2026 rather than a replay of retail‑led rallies. The note emphasizes that recent price pressure pushed bitcoin below JPMorgan’s internal miner breakeven estimate, compressing on‑chain activity and clouding short‑term sentiment, but also setting up a supply‑side adjustment: materially higher production cost estimates imply some miners may curtail output or consolidate, easing selling pressure. The bank points to tangible operational relief within the mining sector—aggregate listed miner market capitalization tracked near roughly $60 billion after a mid‑double‑digit month‑over‑month rebound, while network hashrate slipped below the 1,000 EH/s seven‑day average with intramonth troughs near ~700 EH/s and difficulty easing from roughly 156t to ~146.5t—factors that lifted block‑reward revenue and profitability per EH/s. JPMorgan also flags a growing commercial opportunity for some operators to convert excess power and cooling infrastructure into AI and high‑performance computing (HPC) capacity, a revenue diversification path that has supported equity re‑ratings, though the bank warns conversion risks—accelerator supply constraints, packaging/test backlogs, permitting and the need for firmed power and battery arrangements—could slow or raise execution costs. On the demand side, the bank expects the next phase of upside to be steadier and deeper per trade as insurance funds, asset managers, pensions and other large allocators gradually scale exposure using custody solutions, derivatives and institutional on‑ramps; days of meaningful net inflows into U.S. spot Bitcoin products underline that product‑level demand can move realized liquidity even without broad retail participation. JPMorgan contrasts bitcoin’s shifting relative risk profile with gold—where rising gold volatility and bitcoin’s behavior have altered comparative appeal for certain strategic allocators—and stresses that regulatory clarity in the U.S., particularly around custody and digital‑asset operational rules, would be a force‑multiplier for sustained institutional allocations. The firm sketches a multi‑step recovery: compressed miner activity reduces supply risk, regulatory progress lowers operational uncertainty, and institutional demand supplies steady buying pressure; together these forces could produce a more constructive market structure. Near‑term risks remain meaningful—prolonged trading below breakeven could accelerate miner distress and sector consolidation, and a hashrate rebound or disappointed conversion contracts would increase downside sensitivity—but JPMorgan’s central case treats these pressures as triggers for supply‑side adjustment rather than systemic failure. For investors, the bank recommends tracking custody adoption, ETF/product flows, miner output and announced AI/HPC conversion contracts as higher‑quality indicators of a durable recovery versus headline price moves alone. Ultimately, JPMorgan frames 2026 as a year where allocation depth, institutional plumbing and execution on infrastructure pivots will determine whether the market’s next advance is sustainable.