JPMorgan analysts have expressed doubts about the continued strength of cryptocurrency inflows, citing the current high prices of Bitcoin.
Despite a robust $12 billion inflow into crypto assets so far this year, the sustainability of this trend remains uncertain.
The influx has been largely driven by the popularity of spot bitcoin exchange-traded funds (ETFs), which alone have attracted $16 billion in inflows.
When combined with CME futures and crypto venture capital fundraising, total crypto inflows have reached $25 billion this year.
However, JPMorgan analysts, led by Nikolaos Panigirtzoglou, note that not all of this reflects new money entering the market.
A significant portion of these inflows likely comes from investors moving their holdings from crypto exchanges to spot Bitcoin ETFs, drawn by better cost-effectiveness, liquidity, and regulatory benefits.
This shift is evident from a notable decrease in bitcoin reserves on exchanges—down by 220,000 bitcoins (approximately $13 billion) since January, according to CryptoQuant data.
Adjusting for this internal shift, the net new inflow into crypto stands at around $12 billion.
JPMorgan analysts are cautious about the future pace of these inflows. They estimate that if the current trend were to continue, it would result in an annualized net inflow of about $26 billion.
However, they remain sceptical due to the high current prices of bitcoin, which is trading at around $67,300 compared to its production cost of $45,000.
“We are sceptical that the year-to-date pace of $12 billion will continue into the remainder of the year given how high bitcoin prices are relative to its production cost or relative to gold,” the analysts stated.
This caution comes after the analysts recently revised their central estimate of bitcoin production cost up from $42,000 to $45,000.
