In a recent report, JPMorgan analysts, led by Nikolaos Panigirtzoglou, cast skepticism on the sustainability of the $12 billion year-to-date inflow into crypto assets, attributing it to current high bitcoin prices. While the crypto market has witnessed significant inflows this year, driven mainly by spot bitcoin exchange-traded funds (ETFs), the analysts question whether this momentum will persist throughout the remainder of the year.
Year-to-date, spot bitcoin ETFs have attracted $16 billion in inflows. When factoring in the flow impulse from CME futures and fundraising by crypto venture capital funds, total inflows into crypto have reached $25 billion. However, the analysts caution that not all of this represents new capital entering the market.
According to the report, many investors likely shifted from crypto wallets on exchanges to spot bitcoin ETFs due to factors such as cost-effectiveness, liquidity, and regulatory benefits. This shift is evidenced by the decrease in bitcoin reserves on exchanges by 220,000 bitcoins or $13 billion since the launch of ETFs in January, as per data from CryptoQuant. Adjusting for this shift, the net inflow into crypto assets stands at approximately $12 billion year-to-date.
If the current trend persists, it would result in an annualized net inflow of around $26 billion. However, the analysts express skepticism regarding this projection, citing concerns over bitcoin’s high prices relative to its production cost or gold.
“Given how high bitcoin prices are relative to its production cost or relative to gold, we are skeptical that the YTD pace of $12bn will continue into the remainder of the year,”
Stated the JPMorgan analysts in the report.
