JPMorgan analysts are casting doubt on the sustainability of the $12 billion year-to-date inflow into crypto assets, driven largely by spot bitcoin exchange-traded funds (ETFs), amidst current high bitcoin prices compared to its production cost and gold.

Since the beginning of the year, the crypto market has witnessed significant inflows, primarily fueled by spot bitcoin ETFs. However, JPMorgan analysts led by Nikolaos Panigirtzoglou highlighted uncertainties in their recent report, questioning whether this momentum can persist throughout the remainder of the year.

Spot bitcoin ETFs alone have attracted $16 billion in inflows year-to-date, with additional contributions from CME futures and fundraising by crypto venture capital funds pushing total inflows to $25 billion, according to the analysts. Yet, they cautioned that not all of these inflows represent new capital entering the market.

A notable trend observed by the analysts is the migration of investors from crypto wallets on exchanges to spot bitcoin ETFs, driven by factors such as cost-effectiveness, liquidity, and regulatory advantages. This shift is underscored by the significant decrease in bitcoin reserves on exchanges, amounting to 220,000 bitcoins or approximately $13 billion since the launch of ETFs in January, as reported by CryptoQuant. Adjusting for this shift, JPMorgan estimates the net inflow into crypto assets stands at approximately $12 billion year-to-date.

If the current pace persists, it could translate into an annualized net inflow of about $26 billion. However, the analysts remain skeptical about this prospect, citing concerns over bitcoin's elevated price relative to its production cost and gold.

"Given how high bitcoin prices are relative to its production cost or relative to gold, we are skeptical that the YTD pace of $12 billion will continue into the remainder of the year," stated the JPMorgan analysts in their report.

Last month, the analysts revised their central estimate of bitcoin's production cost to $45,000, up from the previous projection of $42,000, while noting that the current bitcoin price hovers around $67,300, according to data from The Block's bitcoin price page.