JPMorgan: Cryptocurrency has seen a net inflow of $12 billion this year, Bitcoin's high price may not be sustainable

According to a report by The Block, analysts at JPMorgan are skeptical about the sustainability of the strong inflows into cryptocurrencies this year, citing the current high price of Bitcoin.

Net Inflow of Crypto Funds Reaches $12 Billion Year-to-Date

JPMorgan Chase's latest report indicates that the cryptocurrency market has seen a significant inflow of funds driven by Bitcoin spot exchange-traded funds (ETFs) so far this year, totaling $16 billion. When factoring in the inflow from CME futures and crypto venture capital funds, the total inflow into cryptocurrencies year-to-date has reached $25 billion. However, JPMorgan Chase believes that not all of this represents new money entering the market.

Due to cost efficiency, liquidity, and regulatory advantages, many investors may have shifted from exchanges' crypto wallets to Bitcoin spot ETFs. Analysts cited data from CryptoQuant, stating that since the launch of ETFs in January, exchanges' Bitcoin reserves have decreased by 220,000 Bitcoins, which is equivalent to $13 billion, indicating a significant shift. Adjusting for this data, the net inflow of crypto assets year-to-date is approximately $12 billion.

ETF $16 billion + CME Futures and Crypto Venture Capital $9 billion - Exchanges $13 billion = $12 billion

Bitcoin Price Overvalued, Sustaining Inflow of Funds May Be Challenging

Although at the current pace an estimated $26 billion net inflow is projected by year-end, JPMorgan Chase remains skeptical about the sustainability of this growth:

Given that the price of Bitcoin is relatively high compared to its production cost or to the price of gold, we hold a skeptical view on whether the $12 billion growth from the beginning of the year can be sustained until year-end.

JPMorgan Chase raised its estimate of Bitcoin's production cost from the previous $42,000 to $45,000 last month. As of the deadline, the price of Bitcoin was $66,500.