JPMorgan: Bitcoin May Edge Out Gold If ETF Hedging Unwinds, If 🪙

JPMorgan analysts led by Nikolaos Panigirtzoglou wrote that Bitcoin could receive more support than gold as investors prepare to unwind hedges in the ETF market, according to a research note cited by outlets covering the bank. The team said that if hedge demand slows and market sentiment turns, Bitcoin's positioning leaves more room to recover relative to gold.

The so-called "debasement trade" stalled over the past week after reappearing following a late-July Federal Reserve meeting, the analysts wrote. Inflows had returned to both Bitcoin and gold ETFs after that meeting, but the trend has since dissipated. The real yield on bonds has risen, the U.S. Federal Reserve raised rates by 0.25%, and the Senate did not pass the CLARITY Act, factors the team said weighed on the trade.

Gold has pulled in more ETF buying than Bitcoin in this period, with gold ETFs returning to positive year-to-date flows. Bitcoin ETFs, by contrast, have only recovered approximately 50% of prior outflows, according to the note. Demand for Bitcoin ETFs has cooled over the past several days as well.

The analysts also pointed to short-interest data, noting that short interest on IBIT is holding close to its yearly maximum while short interest on GLD is below historical levels. The combination of recovering Bitcoin ETF inflows and elevated IBIT short interest could provide additional support for $BTC if hedging in the ETF space begins to unwind, the team wrote. The note stopped short of projecting specific price targets.