JPMorgan’s Jan. 3 research note states that the “debasement trade” into gold and Bitcoin is “here to stay” amid ongoing geopolitical uncertainty.
According to a research note from JPMorgan that was shared with Cointelegraph on January 3, the “debasement trade” into gold and Bitcoin is “here to stay” as investors prepare for persistent geopolitical uncertainty.
“Gold and BTC appear to have become more significant components of investors’ portfolios structurally” as they increasingly seek to mitigate inflation and geopolitical risk, according to the bank, which cited the “record capital inflow into crypto markets in 2024.”
JPMorgan defined the debasement trade as the rise in demand for gold and BTC as a result of a variety of factors, including “structurally higher geopolitical uncertainty since 2022, persistent high uncertainty about the longer-term inflation backdrop, and concerns about ‘debt debasement’ due to persistently high government deficits across major economies,” among others.
Inflows Of Institutional Capital
Fearing that “all roads lead to inflation” in the United States, investment managers, such as Paul Tudor Jones, are eying Bitcoin and other commodities.
VanEck, an asset manager, stated in December that US state governments are also incorporating Bitcoin as “a hedge against fiscal uncertainty.”
In October, JPMorgan identified the increased open interest in BTC futures as an additional indicator that “funds might perceive gold and Bitcoin as comparable assets.”
According to data from CoinGlass, the net open interest on BTC futures increased from approximately $18 billion in January to over $55 billion in December of 2024.
In October, JPMorgan stated that the fact that Bitcoin [exchange-traded funds] resumed inflows in September following an outflow in August suggests that retail investors may also similarly view gold and Bitcoin.
According to Bloomberg Intelligence data, US Bitcoin ETFs achieved their first $100 billion in net assets in November.
According to a December report by Citi that was shared with Cointelegraph, crypto ETF inflows are among the most critical metrics to monitor, as they are “more likely than other trading activity to be new funds/market participants entering the crypto space.”
According to asset manager Sygnum Bank in December, the potential for positive “demand shocks” for Bitcoin in 2025 could result from the surge in institutional inflows, which could send the price of BTC skyrocketing.
