According to a report by The Block , JPMorgan analysts have expressed doubts about the sustainability of strong cryptocurrency inflows so far this year, citing the current high Bitcoin price.
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ToggleCryptocurrency net inflows so far this year are $12 billion
JPMorgan Chase pointed out in the latest report that so far this year, the cryptocurrency market has seen a large inflow of funds driven by Bitcoin spot exchange-traded funds, which has now reached US$16 billion. If CME futures and crypto venture capital are included, With the inflow of funds brought about by fund financing, the total inflow of cryptocurrency has reached US$25 billion so far this year. However, JPMorgan Chase believes that not all of these represent new funds entering the market.
Many investors may have switched from crypto wallets on exchanges to Bitcoin spot ETFs due to cost-effectiveness, liquidity, and regulatory advantages. Analysts cited data from CryptoQuant as saying that since the ETF was launched in January, exchanges' Bitcoin reserves have decreased by 220,000 Bitcoins, or $13 billion, which is a significant shift. After adjusting for this data, the net inflow of crypto assets so far this year is about $12 billion.
ETF 16 billion + CME futures and crypto venture capital 9 billion - Exchange 13 billion = $12 billion
Bitcoin prices are on the high side and capital inflows may be unsustainable
Although it is estimated that there will be a net inflow of US$26 billion by the end of the year at this rate, JPMorgan Chase is skeptical about whether growth at this rate can be maintained:
We are skeptical that the $12 billion year-to-date growth rate can be sustained through the end of the year, given the high price of Bitcoin relative to its cost of production or relative to gold.
JPMorgan last month raised its estimate of Bitcoin production costs to $45,000 from a previous estimate of $42,000. At the time of writing, the price of Bitcoin was US$66,500.
