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Crypto markets have seen $12 billion of net inflows year-to-date, the report said.
The bank said that the majority of the $16 billion inflow into spot bitcoin ETFs likely came from existing digital wallets on exchanges.
JPMorgan said it was skeptical that the pace of inflows will continue for the rest of the year.
Digital assets have seen $12 billion of net inflows year-to-date, and if flows continue at the same pace the number could grow to $26 billion by the end of the year, JPMorgan (JPM) said in a research report on Wednesday.
Spot bitcoin (BTC) exchange-traded funds (ETFs) have led the way, attracting $16 billion of net inflows, the report said. This number, when combined with Chicago Mercantile Exchange (CME) futures flows plus capital raised by crypto venture capital funds, increases the total inflow into digital asset markets this year to $25 billion.
Still, not all of these inflows are new money entering the crypto space. “We believe there has likely been a significant rotation away from digital wallets on exchanges to the new spot bitcoin ETFs,” analysts led by Nikolaos Panigirtzoglou wrote.
This rotation is evidenced in the drop in bitcoin reserves across exchanges since the spot ETFs launched in January, which is estimated at 0.22 million bitcoin or $13 billion, the bank said.
“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. Using this assumption reduces the net flow into digital assets year-to-date to $12 billion from $25 billion, the bank said.
This $12 billion net inflow is stronger than last year but is notably lower than during the bull run of 2021/2022, the report added.
Given how high the bitcoin price is relative to miners’ production cost or relative to the cost of gold, JPMorgan said it is skeptical that inflows will continue at the same rate for the rest of the year.
Read more: Crypto Mainstream Adoption Has Increased in Recent Months, Canaccord Says
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