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JPMorgan has issued a major warning about Bitcoin, highlighting exaggerated ETF demand and noting a plunge in BTC prices below $67,000. The bank points out that most inflows are merely recycled holdings, not fresh investments.
JPMorgan Warns of Exaggerated Bitcoin ETF Demand, Highlights Shift in Institutional Investment Patterns
In a recent report by U.Today, JPMorgan, a major banking institution, recently issued a significant Bitcoin warning, asserting that the demand for spot-based exchange-traded funds linked to the second-largest cryptocurrency is significantly exaggerated.
JPMorgan has underscored a significant shift in institutional investment patterns, emphasizing that not all inflows are genuinely fresh money from institutional investors. This shift has led to a decrease in cryptocurrency wallets on exchanges.
Bitcoin ETFs have become preferable for obtaining Bitcoin exposure due to cost-effectiveness, regulatory protection, and deeper liquidity.
Notably, the introduction of spot ETFs resulted in a substantial decrease in Bitcoin reserves at exchanges.
According to JPMorgan, most of the $25 billion in ETF inflows recorded since the beginning of their January trading is a rotation from existing digital wallets. This means that investors are not bringing in new money but shifting their existing cryptocurrency holdings into ETFs. This is a significant setback to the dominant bullish narrative about significant institutional demand.
The banking behemoth estimated that the net flows into Bitcoin ETFs are approximately $12 billion.
Additionally, JPMorgan has observed a potential impact on Bitcoin prices, noting that they are elevated compared to the production cost of the leading cryptocurrency. Consequently, the banking behemoth anticipates little inflows shortly.
On June 13, Bitcoin ETFs experienced outflows totaling USD 244 million. The most significant cryptocurrency is currently priced below $67,000.
Analysts Dispute JPMorgan's Bitcoin ETF Warning, Highlighting Recycled Inflows and Future Resilience
It has long been recognized that certain inflows are merely recycled Bitcoin, as renowned analyst James Seyffart noted. “Recycled Bitcoin” refers to Bitcoin that is already in circulation and is being moved from one wallet to another, rather than new Bitcoin being introduced into the market. "To be fair. This broad assessment has been accepted and known virtually since the day they launched," he said. Seyffart also doubts the precision of JPMorgan's figures, as the proportion of recycling.
Eric Balchunas, Bloomberg's senior ETF analyst, has forecasted that JPMorgan's positions against the ETF industry, including Bitcoin ETFs, will not endure with time. “They have not exactly been thought leaders in this area.” Balchunas stated in a social media post that any predictions that bet against the ETF (regardless of category) likely won't age well.
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