JPMorgan Issues Major Bitcoin Warning, Stating That the Demand for Spot-Based Exchange-Traded Funds That Are Tied to the Second-Largest Cryptocurrency Is Significantly Overestimated

Banking giant JPMorgan recently issued a major Bitcoin warning, stating that the demand for spot-based exchange-traded funds that are tied to the second-largest cryptocurrency is significantly overestimated.

Banking giant JPMorgan has issued a major Bitcoin warning, stating that demand for spot-based exchange-traded funds (ETFs) that are tied to the second-largest cryptocurrency is being significantly overestimated.

According to JPMorgan, not all of the inflows are actually fresh money from institutional investors. In reality, there has been a substantial rotation from cryptocurrency wallets on exchanges.

Due to factors such as cost effectiveness, regulatory protection, and deeper liquidity, Bitcoin ETFs have now emerged as the preferred instrument for gaining Bitcoin exposure.

As such, exchanges experienced a substantial drop in their Bitcoin reserves following the debut of spot ETFs.

However, JPMorgan has stated that the majority of the $25 billion in ETF inflows that have been recorded since the start of their trading in January actually represent a rotation from existing digital wallets—a major blow to the dominant bullish narrative about significant institutional demand.

The banking giant has estimated that the actual net flows into Bitcoin ETFs stand at roughly $12 billion.

On top of that, JPMorgan has noted that Bitcoin prices are high relative to the production cost of the leading cryptocurrency, which is why the banking giant does not anticipate substantial inflows in the coming months.

Bitcoin ETFs saw $244 million in outflows on Thursday. Meanwhile, the largest cryptocurrency trades below the $67,000 level.

'Nothing new'

As prominent analyst James Seyffart noted, it has been known for a long time that some of the inflows are simply recycled Bitcoin.

"To be fair. This broad assessment has been accepted and known virtually since the day they launched," he said. Seyffart also questioned the accuracy of JPMorgan's numbers, as the portion of recycled coins appears to be too high.

Eric Balchunas, Bloomberg's senior ETF analyst, predicted that JPMorgan's anti-ETF takes will not age well.

"They haven’t exactly been thought leaders here. In the end tho any calls that bet against the ETF (regardless of category) probably won’t age well," Balchunas said in a social media post.

News source：https://www.kdj.com/cryptocurrencies-news/articles/jpmorgan-issues-major-bitcoin-warning-stating-demand-spotbased-exchangetraded-funds-tied-largest-cryptocurrency-overestimated.html

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