Bitcoin's Strength Against Gold Hinges on ETF Hedging

JPMorgan analysts have identified a potential reason for Bitcoin's relative strength against gold. According to them, Bitcoin could find more support if investors reduce their hedging positions in exchange-traded funds (ETFs). Both Bitcoin and gold ETFs have seen inflows since the end of July, but the recovery has been stronger on the gold side.

The analysts noted that while institutional investors are supporting both assets with high positions in futures, there is a difference in short positions within ETFs. BlackRock's iShares Bitcoin Trust ETF (IBIT) has seen high short positions near year-highs, whereas the SPDR Gold Shares ETF (GLD), which tracks gold, has positions below historical averages.

This disparity indicates that investors are more cautious about Bitcoin compared to gold. The put-to-call ratio for IBIT is also higher than for GLD, indicating a greater demand for hedging around the Bitcoin ETF.