Twalak
JPMorgan Chase expressed uncertainty about the sustainability of strong net inflows into cryptocurrencies so far this year.
This is largely driven by net cryptocurrency inflows of $12B year-to-date (which could grow to $26B by the end of 2024 if flows continue to grow at the same pace) Be tempted by spot Bitcoin (BTC-USD) exchange-traded fund, analyst Nikolaos Panigirtzoglou wrote in a recent report.
The report claims that such Bitcoin holding products have attracted $16B in net inflows since their launch. Combined with CME (CME) futures flows and funds raised by cryptocurrency venture capital funds, total cryptocurrency inflows have reached $25B so far this year.
While the number is impressive, Panigirtzoglou said it may not fully represent new money entering the cryptocurrency space. “We believe there could be a significant shift in exchange digital wallets towards new spot Bitcoin ETFs,” he explained.
The shift is evident, he noted, with the exchange’s Bitcoin (BTC-USD) reserves having fallen by 220,000 BTC, or $13B, since the ETF was launched in January. “This means that much of the $16B in inflows into spot Bitcoin ETFs since launch likely reflects the rotation of existing digital wallets on exchanges.”
He attributes this rotation to the “cost-effectiveness, deeper liquidity, regulatory protection and convenience of ETF wrappers, which have become the preferred choice for market participants to invest in Bitcoin for both existing and new cryptocurrency investors.” Tool of choice.
All in all, analysts are skeptical that cryptocurrency inflows will continue at the same pace for the rest of the year, given how high the price of Bitcoin (BTC-USD) is relative to the cost of production or relative to the cost of gold.
In fact, the price of Bitcoin (BTC-USD) has risen significantly this year, rising by approximately 51%, reaching an all-time high of over $73,000 in March. Since its peak, the coin has been consolidating within a trading range of $59,000 to $71,000 as investors look for potential catalysts. Bitcoin was trading at $65,400 in afternoon trading on Friday.
Most Seeking Alpha analysts are bullish on Bitcoin (BTC-USD). However, JH Research believes that “the lackluster and declining media attention and interest in Bitcoin is far outweighed” by the impact of several “upcoming events that may lead to marginal demand growth.”
The SA writer noted that search volume and price increases have a strong historical relationship. “Major rallies can only happen if there is an uptick in concern and interest, and that is not currently the case.”
