Bitcoin Gains Relative Support Over Gold As ETF Hedging Pressure Eases
JPMorgan analysts say Bitcoin could gain more relative support than Gold if hedging pressure on Bitcoin ETFs eases. According to their note, dated September 17, Gold ETFs have already recovered from outflows earlier this year, but Bitcoin ETFs have only clawed back half of theirs.
The key difference lies in options data, where put-to-call open interest on BlackRock's IBIT (the largest spot Bitcoin ETF) is running higher than on GLD (the biggest Gold ETF). This means traders are buying more downside protection against Bitcoin relative to their bullish bets, compared to Gold. Short interest in IBIT is sitting near its highest level of the year, while short interest in GLD is below its historical average.
JPMorgan isn't arguing that Bitcoin is safer than Gold or even better; rather, they believe that Bitcoin's ETF trade is more crowded with defensive positioning. This means that when fear clears and put buyers start closing positions and short sellers cover, Bitcoin has room to re-rate upward because it's currently being leaned against by the market.