JPMorgan: Perpetual futures driven by leverage traders, not institutions

JPMorgan stated in a report that crypto perpetual futures are unlikely to replace traditional derivatives for institutional investors, as they offer few additional benefits. According to CoinDesk, the bank argued that perpetuals are dominated by traders making leveraged directional bets rather than by market participants looking to hedge underlying asset risk, noting that current institutional demand is "non-existent or extremely limited." The report identified several barriers to institutional adoption, including unlimited basis risk, a lack of price benchmarks for different maturities, and no support for physical delivery. Citing data from Hyperliquid, JPMorgan also raised questions about market depth, pointing out that about half of all offshore perpetual futures trading volume originates from just 12 wallets. However, the bank expects demand from retail traders to continue, given the advantages of 24-hour trading and built-in leverage structures.