JPMorgan: Decline in Bitcoin Hedge Demand May Boost Support
JPMorgan analysts have observed a decline in hedging demand for Bitcoin ETFs, which could provide stronger support for the asset compared to gold. This trend follows the Federal Reserve meeting at the end of July, where there was a simultaneous inflow of funds into cryptocurrency and precious metal funds.
The analysts attribute this trend to the return of the debasement trade strategy, but 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. As a result, gold ETFs have already recovered all outflows since the beginning of the year, while bitcoin products have compensated for about half of the losses.
JPMorgan notes that positioning in the futures market for both gold and Bitcoin remains high, indicating sustained support from institutional investors. However, the key difference lies in hedging through ETFs, with short interest in the BlackRock iShares Bitcoin Trust ETF (IBIT) remaining near year-to-date highs, while the largest gold fund, SPDR Gold Shares ETF (GLD), is below its historical average.