Bitcoin Could Trump Gold If Hedging Demand Eases

JPMorgan analysts have suggested that Bitcoin could outperform gold if the hedging pressure on BTC ETFs starts to fade. The bank's research note, led by analyst Nikolaos Panigirtzoglou, highlighted that Bitcoin's more cautious backdrop compared to gold could work in its favor if that hedging demand eases.

In recent months, the 'debasement trade' - where investors buy Bitcoin and gold as a hedge against currency weakness - picked up steam after the Federal Reserve's July meeting. However, this momentum has stalled due to factors such as bond yields climbing, the Fed raising interest rates by 0.25%, and the Senate failing to pass the CLARITY Act.

JPMorgan noted that gold ETFs have recovered all of their outflows for the year, while Bitcoin ETFs have only taken back around half of theirs. The bank also observed that demand for BTC ETFs has been cooling in the past couple of days, which could leave more room for a rebound if market conditions change.