JPMorgan Warns of Exaggerated Bitcoin ETF Demand, Highlights Shift in Institutional Investment Patterns

Bitcoin ETFs have become preferable for obtaining Bitcoin exposure due to cost-effectiveness, regulatory protection, and deeper liquidity.

Banking giant JPMorgan has issued a major warning regarding Bitcoin, highlighting exaggerated demand for spot exchange-traded funds (ETFs) and noting a decline in BTC prices below $67,000.

According to a recent report by U.Today, JPMorgan has asserted that the demand for spot-based ETFs linked to the second-largest cryptocurrency is significantly inflated.

The bank points out that there has been a shift in institutional investment patterns, with most inflows being recycled holdings rather than fresh investments. This shift has led to a decrease in cryptocurrency wallets on exchanges.

Due to their cost-effectiveness, regulatory protection, and deeper liquidity, Bitcoin ETFs have become the preferred vehicle for obtaining Bitcoin exposure.

Moreover, the introduction of spot ETFs has resulted in a substantial decrease in Bitcoin reserves at exchanges.

JPMorgan estimates that of the $25 billion in ETF inflows recorded since the beginning of their January trading, only about $12 billion can be attributed to net flows into Bitcoin ETFs.

The banking behemoth anticipates little inflows in the near term due to Bitcoin prices being elevated compared to the production cost of the leading cryptocurrency.

On June 13, Bitcoin ETFs experienced outflows totaling USD 244 million. The most significant cryptocurrency is currently priced below $67,000.

Analysts, however, dispute JPMorgan's pessimistic analysis, highlighting the presence of recycled inflows and expressing optimism about the ETF's future resilience.

As renowned analyst James Seyffart points out, it has been evident for a long time that some inflows are merely recycled Bitcoin. “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. Seyffart also doubts the precision of JPMorgan's figures, as the proportion of recycling can only be estimated and varies depending on the definition of an old and new wallet.

Eric Balchunas, Bloomberg's senior ETF analyst, has observed that JPMorgan's positions against the ETF industry, including Bitcoin ETFs, will not hold up over time. “They have not exactly been thought leaders in this area,” Balchunas said in a social media post, adding that any predictions that bet against the ETF (regardless of category) likely won't age well.

News source：https://www.kdj.com/cryptocurrencies-news/articles/jpmorgan-warns-exaggerated-bitcoin-etf-demand-highlights-shift-institutional-investment-patterns.html

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