Crypto Markets Have Seen $12B of Net Inflows This Year, JPMorgan Says

As an analyst with a background in traditional finance and a growing interest in the crypto market, I find JPMorgan’s recent research report on digital asset inflows intriguing. According to the report, crypto markets have seen $12 billion of net inflows year-to-date, which is stronger than last year but still lower than during the bull run of 2021/2022.

According to JPMorgan’s latest research report released on Wednesday, digital asset investments have already amassed approximately $12 billion in new funds this year. If the current pace of investment continues, the total could reach an impressive $26 billion by the end of 2021.

It’s important to note that not all of these inflows represent fresh funds entering the crypto market. In fact, our analysis suggests a notable shift from digital wallets on exchanges towards the newly introduced spot bitcoin ETFs.

I’ve noticed a significant decrease in bitcoin holdings on cryptocurrency exchanges since the launch of the spot Bitcoin Exchange-Traded Funds (ETFs) in January. According to my analysis, approximately 0.22 million Bitcoins or around $13 billion worth have been withdrawn from these platforms.

Based on this assumption, it is estimated that around 4.6 trillion dollars, or roughly two-thirds, of the total inflow of 16 billion dollars into bitcoin spot ETFs since their launch, might actually represent a transfer from digital wallets on cryptocurrency exchanges rather than new investments. Consequently, the true net investment in digital assets this year would be reduced to 12 billion dollars instead of the initial reported 25 billion dollars.

The reported inflow of $12 billion surpasses last year’s figure, yet it pales in comparison to the substantial inflows experienced during the 2021-2022 market surge.

Based on Bitcoin’s current price being significantly higher than the costs for miners to produce it or compared to the price of gold, JPMorgan expressed doubt that the inflow rate will remain as strong for the remainder of the year.