JPMorgan Sees Stronger Support for Bitcoin Over Gold Amid Weakening Hedging Demand

JPMorgan analysts have identified a potential shift in investor behavior that could boost Bitcoin prices. According to their report, a decline in hedging demand for Bitcoin ETFs may provide stronger support for the asset compared to gold.

This trend is attributed to the return of the debasement trade strategy following the Federal Reserve meeting at the end of July. However, after the September interest rate hike in the U.S., this trend weakened due to rising inflation-adjusted bond yields and the failure of the CLARITY Act bill.

JPMorgan noted that gold ETFs have already recovered all outflows since the beginning of the year, while Bitcoin products have compensated for about half of the losses. The bank attributed this difference in performance to hedging through ETFs, with short interest in the BlackRock iShares Bitcoin Trust ETF (IBIT) remaining near year-to-date highs.