JPMorgan analysts suggest that a decline in hedging demand for Bitcoin ETFs could provide stronger support for the cryptocurrency compared to gold. Following the Federal Reserve meeting in late July, both crypto and precious metal funds saw simultaneous inflows, linked to the debasement trade strategy. However, this trend weakened after the September interest rate hike in the United States.
The bank attributes this shift to rising inflation-adjusted bond yields and the failure of the CLARITY Act. While gold ETFs have recovered all year-to-date outflows, Bitcoin products have only recouped about half of their losses. Current demand for crypto funds remains low, which analysts believe leaves room for recovery if market sentiment improves.
Institutional support for both assets remains robust, as evidenced by high positioning in futures markets. JPMorgan notes a key difference in ETF hedging: short interest in the BlackRock iShares Bitcoin Trust ETF (IBIT) is near year-to-date highs, whereas the SPDR Gold Shares ETF (GLD) shows levels below its historical average.
The ratio of open interest in put and call options for IBIT is also higher than that of GLD. According to the bank, this contrast indicates that Bitcoin continues to face greater market skepticism than gold, likely due to higher hedging demand despite recent inflows and increased futures market positioning.
