According to a report from The Block, JPMorgan analysts have expressed doubts about the sustainability of the strong inflow of cryptocurrencies so far this year, citing the current high price of Bitcoin.
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Cryptocurrency net inflows reach $12 billion so far this year
High price of Bitcoin may make inflows difficult to sustain
In its latest report, JPMorgan pointed out that there has been a significant inflow of funds into the cryptocurrency market driven by Bitcoin spot exchange-traded funds, totaling $16 billion so far this year. When combined with the inflows from CME futures and cryptocurrency venture capital funds, the total inflow of cryptocurrency so far this year has reached $25 billion. However, JPMorgan believes that not all of these represent new funds entering the market.
Due to cost efficiency, liquidity, and regulatory advantages, many investors may have shifted from exchanges’ cryptocurrency wallets to Bitcoin spot ETFs. Analysts cited data from CryptoQuant indicating that since the launch of ETFs in January, exchanges’ Bitcoin reserves have decreased by 220,000 Bitcoins, or $13 billion, a clear shift. Adjusting for this data, the net inflow of cryptocurrency assets so far this year is approximately $12 billion.
Although at this pace it is estimated that there will be $26 billion in net inflows by the end of the year, JPMorgan holds a skeptical attitude towards whether this growth rate can be sustained:
Given that the price of Bitcoin is relatively high compared to its production cost or to the price of gold, we are skeptical of whether the $12 billion growth rate from the beginning of the year can be sustained until the end of the year.
JPMorgan revised its estimate of Bitcoin production cost from $42,000 to $45,000 last month. The Bitcoin price was $66,500 at the time of writing.
JPMorgan
Bitcoin