JPMorgan analysts have expressed doubts about the sustainability of the $12 billion year-to-date inflow into crypto assets.
Analysts led by Nikolaos Panigirtzoglou have expressed skepticism due to both the cost of production and the current high Bitcoin prices, which are significantly higher compared to gold.
The crypto market has seen significant inflows this year, largely driven by spot Bitcoin ETFs. However, analysts question whether this pace will continue for the rest of the year.
Spot bitcoin ETFs have generated $16 billion in inflows year-to-date. Combined with the flow momentum brought by CME futures and fundraising by crypto venture capital funds, total inflows into crypto have reached $25 billion year-to-date. But analysts warn that not all of this represents new money entering the market.
Many investors may have shifted from crypto wallets on exchanges to spot Bitcoin ETFs due to their cost-effectiveness, liquidity and regulatory advantages. According to data from CryptoQuant, this change is clearly seen in the fact that BTC reserves on exchanges have decreased by 220,000 BTC, or $13 billion, since the ETFs were launched in January. After adjusting for this change, net inflows into crypto assets have been approximately $12 billion year-to-date.
If the current trend continues, annual net inflows will be around $26 billion. However, analysts are skeptical about this.
“Given how high Bitcoin prices are relative to the cost of production or below, we remain skeptical that the $12 billion year-to-date pace will continue through the remainder of the year,” JPMorgan analysts said in the report.
*This is not investment advice.