Goldman Adjusts Year-to-Date Digital Asset Inflow Estimate to $8 Billion, Down from $12 Billion

Goldman Sachs has lowered its estimate for net inflows into digital assets year-to-date (YTD) from $12 billion to $8 billion. This revision follows a reevaluation of various factors that have influenced the market over the last month.

The original estimate of $12 billion, calculated as of June 12, was derived from inflows into cryptocurrency funds, activity in CME futures markets, fundraising efforts by crypto venture capitalists, and adjustments made due to the transition from digital wallets to new spot ETFs.

The new estimate of $8 billion accounts for a net inflow of $14 billion into crypto funds by July 9, a contribution of $5 billion from CME futures, and $5.7 billion in year-to-date fundraising by crypto venture capital funds. However, this is offset by a $17 billion adjustment reflecting the transition from digital wallets on exchanges to spot Bitcoin ETFs, which provide benefits such as lower costs and regulatory security.

Evidence of the shift away from exchange wallets is illustrated by a reported drop in Bitcoin reserves across exchanges, with a decrease of approximately 0.29 million bitcoins, valued at around $17 billion, noted by CryptoQuant as of July 9.

Goldman Sachs expressed skepticism that the initial $12 billion estimate would hold throughout the year, especially given the elevated Bitcoin prices relative to production costs and its competitive standing against gold. The firm was surprised by the swift decline in the estimated net inflow.

This downward adjustment is primarily linked to the reduction of Bitcoin reserves on exchanges over the past month, likely due to liquidations tied to entities such as Gemini, Mt. Gox, or the German government, which has been liquidating Bitcoin obtained through law enforcement actions.

Despite this decline, Goldman Sachs anticipates that these liquidations will lessen after July. The firm maintains a favorable outlook on the cryptocurrency market, projecting a recovery beginning in August.