JPMorgan Analysts Express Doubts about Crypto Assets Inflows
JPMorgan analysts have raised concerns regarding the sustainability of the $12 billion inflow into crypto assets so far this year.
Led by Nikolaos Panigirtzoglou, the analysts are skeptical due to the production costs and the current high prices of Bitcoin, which are significantly higher compared to gold.
The crypto market has experienced substantial inflows this year, driven primarily by spot Bitcoin ETFs. However, there are doubts about whether this momentum will continue for the rest of the year.
Spot Bitcoin ETFs have attracted $16 billion in inflows year-to-date. When combined with the flow from CME futures and fundraising by crypto venture capital funds, total inflows into crypto have reached $25 billion so far this year. However, analysts caution that not all of this represents new money entering the market.
Many investors may have transitioned from crypto wallets on exchanges to spot Bitcoin ETFs due to their cost efficiency, liquidity, and regulatory advantages. Data from CryptoQuant shows a decrease of 220,000 BTC, or $13 billion, in BTC reserves on exchanges since the ETFs launched in January. Accounting for this change, net inflows into crypto assets have been around $12 billion year-to-date.
If the current trend persists, annual net inflows could reach approximately $26 billion. Nevertheless, analysts are doubtful about this projection.
“Given the high prices of Bitcoin compared to production costs, we are skeptical that the $12 billion pace so far this year will continue throughout the rest of the year,” stated the JPMorgan analysts in their report.
*Please note that this is not investment advice.
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