Goldman Sachs updated its estimate for net inflows into digital assets year-to-date (YTD), revising the figure down from $12 billion to $8 billion. This significant adjustment comes after a reassessment of various contributing factors over the past month.
The initial $12 billion estimate as of June 12 was based on a combination of inflows into cryptocurrency funds, the flow implied by CME futures, fundraising by crypto venture capital funds, and an adjustment for the shift from digital wallets to new spot ETFs.
The revised $8 billion figure reflects a $14 billion net inflow into crypto funds by July 9, a flow impulse from CME futures of $5 billion, and year-to-date fundraising by crypto venture capital funds amounting to $5.7 billion. This is offset by a $17 billion adjustment due to the rotation from digital wallets on exchanges to spot Bitcoin ETFs, which offer advantages like cost-effectiveness and regulatory protection.
The shift away from exchange wallets is evidenced by a decrease in Bitcoin reserves across exchanges, estimated at 0.29 million bitcoins or $17 billion by CryptoQuant as of July 9.
Goldman Sachs had been skeptical that the original $12 billion estimate would persist throughout the remainder of the year, given the high Bitcoin prices relative to production costs and its value compared to gold. The firm expressed surprise at the rapid decline in the estimated net flow.
The reduction is largely attributed to the decrease in Bitcoin reserves on exchanges over the past month, which likely reflects liquidations by creditors of Gemini, Mt. Gox, or the German government, which has been selling Bitcoin seized in criminal activities.
Despite the downward revision, Goldman Sachs anticipates that these liquidations will diminish after July. The firm maintains a positive outlook for the cryptocurrency market, expecting a rebound from August onwards.
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