JPMorgan: Bitcoin could gain more support than gold if ETF hedging declines
Bitcoin may get more support than gold if ETF hedging eases
JPMorgan analysts said bitcoin could receive more support than gold if investors reduce their ETF hedges. The analysts, led by Nikolaos Panigirtzoglou, made the statement in a Wednesday report.
An ETF is a fund that trades on a stock exchange, like a share. Both bitcoin and gold ETFs saw inflows after the Federal Reserve meeting in late July, when the so-called “debasement trade” returned. That trade involves buying assets like gold and bitcoin as a hedge against currency devaluation or inflation.
Recent weakness in the debasement trade
The analysts said this trade has weakened over the past week. They pointed to rising inflation-adjusted bond yields and the Senate failing to advance the Clarity Act, a piece of crypto-related legislation.
Gold ETFs have recovered all their outflows from earlier this year, while bitcoin ETFs have recovered only about half. Bitcoin ETF demand has also dropped in recent days, leaving more room for a recovery if the news flow improves, according to the analysts.
Futures and short interest
Futures positioning in both gold and bitcoin remains high, suggesting institutional investors have supported both assets, the analysts said. However, short interest in BlackRock's iShares Bitcoin Trust ETF, known as IBIT, remains close to its highest level this year. In comparison, short interest in the SPDR Gold Shares ETF, or GLD, is below its historical average.
The analysts noted the higher short interest and hedging around IBIT compared with GLD shows investors are still more cautious on bitcoin than gold. The put-to-call open interest ratio is also higher for IBIT than for GLD, pointing to more hedging around bitcoin.
What the analysts concluded
“While we recognize that other factors might also affect the bitcoin and gold trajectories going forward, from a positioning point of view, the more elevated short interest in the IBIT vs. GLD ETF could create more support for bitcoin vs gold from here if hedging demand is reduced,” the analysts wrote.
What is confirmed
The report is from JPMorgan analysts. It describes current ETF flows and positioning as of the report date. These are the analysts' observations and conclusions, not guarantees of future performance.
What is still unclear
Whether hedging demand will actually decline is not known. The analysts themselves noted other factors could affect bitcoin and gold going forward.
Why it matters
The analysis suggests that if investor caution around bitcoin eases, the cryptocurrency could see stronger support relative to gold. This could influence how some investors view bitcoin as a hedge asset.
What happens next
The analysts did not provide a specific timeline or next step. They only described the current positioning and a possible scenario based on reduced hedging.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.