Bitcoin ETF Hedges Could Give Crypto an Edge Over Gold

JPMorgan analysts argue that Bitcoin could receive a stronger tailwind than gold if investors unwind their defensive positions in spot Bitcoin ETFs. The bank's research shows that hedging activity surrounding these funds is unusually high, particularly for BlackRock's iShares Bitcoin Trust (IBIT).

Compared to gold ETFs, which have fully replenished the capital that fled earlier this year, Bitcoin ETFs have only clawed back about half of their prior outflows. Weekly data from SoSoValue indicates that demand for Bitcoin ETFs weakened further in September, with net outflows of $586.27 million in the most recent reading.

JPMorgan interprets this divergence as a potential opportunity rather than a warning sign. The analysts believe that because Bitcoin ETF demand has pulled back more sharply than gold, there is more room for a rebound if the news cycle turns favorable.