Markets
Crypto markets have seen $12 billion in net inflows this year, according to JPMorgan (JPM)
Digital assets have seen net inflows of $12 billion since the start of the year, and if flows continue at the same pace, this figure could reach $26 billion by the end of the year, a JPMorgan (JPM) said in a research report on Wednesday.
Spot bitcoin (BTC) Exchange-traded funds (ETFs) led the way, attracting $16 billion in net inflows, according to the report. This figure, combined with forward flows from the Chicago Mercantile Exchange (CME) and capital raised by crypto venture funds, brings the total inflow into digital asset markets this year to $25 billion.
Yet not all of these flows are new money entering the crypto space. “We believe there has likely been a significant rotation from digital wallets on exchanges to new spot Bitcoin ETFs,” wrote analysts led by Nikolaos Panigirtzoglou.
This rotation is highlighted by the decline in bitcoin reserves on exchanges since the launch of spot ETFs in January, estimated at 0.22 million bitcoins, or $13 billion, the bank said.
“This implies that the majority of the $16 billion inflows to spot Bitcoin ETFs since their launch likely reflect turnover from existing digital wallets on exchanges,” the authors wrote. Using this assumption reduces net flow into digital assets year-to-date from $25 billion to $12 billion, the bank said.
This net inflow of $12 billion is stronger than last year but is significantly lower than during the 2021/2022 bull run, the report added.
Given how high the price of bitcoin is relative to miners’ cost of production or the cost of gold, JPMorgan said it was skeptical that capital inflows would continue at the same pace for the rest of the year.