Investments in digital assets have witnessed a staggering $12 billion of net inflows year-to-date, according to a research report released by JPMorgan Chase & Co. (JPM) on Wednesday. The report suggests that if this pace of inflows continues, the figure could soar to a remarkable $26 billion by the end of the year.
Leading the charge are spot bitcoin (BTC) exchange-traded funds (ETFs), which have attracted a whopping $16 billion of net inflows. This number, when combined with Chicago Mercantile Exchange (CME) futures flows and capital raised by crypto venture capital funds, increases the total inflow into digital asset markets this year to a substantial $25 billion.
However, the report cautions that not all of these inflows represent new money entering the crypto space. Nikolaos Panigirtzoglou, the lead analyst, states, “We believe there has likely been a significant rotation away from digital wallets on exchanges to the new spot bitcoin ETFs.”
This rotation is evident in the drop in bitcoin reserves across exchanges since the spot ETFs launched in January, estimated at 0.22 million bitcoin or $13 billion, according to the bank.
“This implies that the majority of the $16 billion inflow into spot bitcoin ETFs since launch likely reflects a rotation from existing digital wallets on exchanges,” the authors wrote. Based on this assumption, the report reduces the net flow into digital assets year-to-date to $12 billion from $25 billion.
While this $12 billion net inflow is stronger than last year, it is notably lower than during the bull run of 2021/2022, the report added.
Given the high bitcoin price relative to miners’ production cost or the cost of gold, JPMorgan expresses skepticism that inflows will continue at the same rate for the remainder of the year.
