JPMorgan analysts have expressed concerns about the sustainability of the substantial inflow into crypto assets this year, particularly given the current high prices of bitcoin compared to its production costs and gold.

Throughout the year, the crypto market has seen significant investments driven primarily by spot bitcoin exchange-traded funds (ETFs). Despite this influx, analysts led by Nikolaos Panigirtzoglou from JPMorgan highlighted in a recent report that it remains uncertain whether this investment momentum will persist.

According to the report, spot bitcoin ETFs have attracted $16 billion in investments so far this year. When combined with the inflows implied by CME futures and funds raised by crypto venture capital, the total inflow into the crypto market has reached $25 billion year-to-date. However, the analysts pointed out that not all of this capital is new money entering the market.

A notable portion of these funds has come from investors moving their assets from crypto wallets on exchanges to spot bitcoin ETFs. This shift is largely driven by the cost-effectiveness, liquidity, and regulatory advantages offered by ETFs. The analysts noted that since the launch of these ETFs in January, bitcoin reserves on exchanges have decreased by 220,000 bitcoins, equivalent to about $13 billion, based on data from CryptoQuant. After adjusting for this transition, the net inflow into crypto assets stands at approximately $12 billion year-to-date.

If this trend continues, it could lead to an annualized net inflow of around $26 billion. However, the JPMorgan analysts remain doubtful about this scenario.

“Considering how high bitcoin prices are in relation to its production cost or compared to gold, we are skeptical that the year-to-date pace of $12 billion will continue for the rest of the year,” the analysts stated in their report.

In addition, last month, the analysts adjusted their estimate of bitcoin production costs, raising it to $45,000 from the previous estimate of $42,000. This adjustment reflects the increasing costs associated with bitcoin mining.

Currently, bitcoin is priced at around $67,300, which further fuels the analysts’ skepticism about the sustainability of the current investment trend. The high price relative to production costs and other benchmarks like gold creates a challenging environment for maintaining the same level of inflows into the crypto market for the remainder of the year.