JPMorgan issued an assessment on June 29 stating that institutional investors show very little appetite for perpetual futures, the single most-traded product in crypto derivatives. The bank's understanding is based on conversations with clients and market participants, along with checks across its own trading desks. JPMorgan characterized perpetual futures as speculative leverage plays rather than credible substitutes for traditional derivatives, citing structural features that limit institutional uptake despite the product's dominance in retail crypto trading activity.
JPMorgan Finds Limited Institutional Demand for Perpetual Futures
In a note on June 29, JPMorgan said that there seems to be very little institutional appetite for the contracts. The understanding is based on conversations with clients and market participants, along with checks across its own trading desks. The bank characterized perpetual futures as speculative leverage plays rather than credible substitutes for traditional derivatives.
Perpetual futures, or perps, account for a big chunk of crypto derivatives activity, making them a major engine of price discovery and liquidity. They let traders hold leveraged long or short positions with no expiration date, relying on a funding-rate mechanism to keep prices aligned with the spot price.
Yet JPMorgan said its desks see negligible institutional demand. The bulk of the flow, the bank argued, comes from traders chasing leveraged directional exposure, not producers, consumers, or other players hedging genuine underlying risk. In its view, perps deliver few incremental benefits over legacy derivatives for institutional users.
Structural Gaps Deter Institutional Adoption
JPMorgan flagged several features that blunt institutional uptake. This includes unbounded basis risk, the absence of a forward term structure, and, in many cases, no physical delivery. Those traits make perps poorly suited to commercial hedgers and benchmarked asset managers, who need contracts tied closely to regulated indexes and forward pricing curves.
On-chain versions lack the clearing protections institutions expect in the United States, while off-chain products trim roll risk but retain other structural shortcomings.
Concentration is a further concern. Citing public Hyperliquid data, the bank noted that about half of perpetuals volume is funded by just 12 wallets, raising doubts about market depth and the product's capacity to scale into broad institutional use.
Retail Advantages Sustain Demand Despite Institutional Absence
However, the bank wasn't entirely dismissive. Continuous 24/7 access, flexible holding periods, embedded leverage, and the elimination of futures-roll costs make perps well-matched to retail traders and momentum-driven strategies. Those advantages should sustain retail demand even if larger players stay on the sidelines.
FAQ
What did JPMorgan say about perpetual futures on June 29?
JPMorgan issued a note on June 29 stating that institutional investors show very little appetite for perpetual futures. The bank's assessment is based on conversations with clients and market participants, along with checks across its own trading desks. JPMorgan characterized perpetual futures as speculative leverage plays rather than credible substitutes for traditional derivatives.
Why do institutions avoid perpetual futures according to JPMorgan?
JPMorgan flagged several structural features that blunt institutional uptake: unbounded basis risk, the absence of a forward term structure, and in many cases no physical delivery. The bank also cited market concentration — Hyperliquid data shows about half of perpetuals volume is funded by just 12 wallets — raising doubts about market depth and scalability for institutional use.
