According to The Block, JPMorgan analysts have doubts about the sustainability of the strong inflow of cryptocurrency this year, citing the current high price of Bitcoin.
Cryptocurrency net inflow is $12 billion so far this year
Bitcoin’s high price may make inflow unsustainable
In its latest report, JPMorgan pointed out that a large amount of funds has flowed into the cryptocurrency market so far this year, driven by Bitcoin spot trading on exchanges, totaling $16 billion. When including the funds from CME futures and cryptocurrency venture capital, the total inflow of cryptocurrency so far this year has reached $25 billion. However, JPMorgan believes that not all of this represents new funds entering the market.
Due to cost-effectiveness, 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 significant shift. Adjusting for this data, the net inflow of cryptocurrency assets so far this year is approximately $12 billion.
Although at this rate it is estimated that there will be a net inflow of $26 billion by the end of the year, JPMorgan is skeptical about whether this growth rate can be sustained:
Given that the price of Bitcoin is relatively high compared to its production cost or compared to the price of gold, we are skeptical about whether the $12 billion growth rate from the beginning of the year can be sustained until the end of the year.
JPMorgan raised 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.