JPMorgan Analysts Express Doubts on Crypto Inflows
JPMorgan analysts led by Nikolaos Panigirtzoglou have raised concerns about the sustainability of the $12 billion inflow into crypto assets so far this year. They are skeptical about the high cost of production and the soaring Bitcoin prices, which are currently much higher than gold.
The surge in the crypto market has been driven by significant inflows, particularly from spot Bitcoin ETFs. However, analysts are questioning whether this momentum can be sustained for the rest of the year.
Spot Bitcoin ETFs alone have attracted $16 billion in inflows year-to-date. When combined with the momentum from CME futures and fundraising by crypto venture capital funds, total inflows into crypto have reached $25 billion. But analysts caution that not all of this represents new money entering the market.
Many investors have likely shifted from crypto wallets on exchanges to spot Bitcoin ETFs due to their cost-effectiveness, liquidity, and regulatory advantages. Data from CryptoQuant shows a clear decrease in BTC reserves on exchanges by 220,000 BTC, equivalent to $13 billion, since the ETFs launched in January. Adjusting for this change, net inflows into crypto assets stand at around $12 billion so far this year.
If the current trend continues, annual net inflows could reach $26 billion. However, JPMorgan analysts remain doubtful about this projection.
“Given the high Bitcoin prices compared to production costs, we are skeptical that the $12 billion pace seen so far this year will be sustained,” the analysts said in their report.
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