'Debasement trade' loses momentum as inflation fears ease, JPMorgan says
JPMorgan analysts led by Nikolaos Panigirtzoglou report that the 'debasement trade' driving demand for bitcoin and gold is losing momentum. Over the past two weeks, both bitcoin and gold ETFs have seen significant outflows, and institutional positions in CME futures for both assets have weakened. This simultaneous retreat suggests investors are pulling back from macro hedge trades that gained popularity amid geopolitical tensions in the Middle East and inflation fears earlier this year. The bank argues this is not a rotation from bitcoin to gold but rather softer demand for both. The report links the shift to growing expectations of easing US-Iran tensions and potential diplomatic agreements, reducing the need for hedges against inflation and geopolitical risks.
Key facts
- Bitcoin and gold ETFs see simultaneous outflows over past two weeks.
- CME bitcoin and gold futures positions weakened in the same period.
- JPMorgan says move not a rotation but softer demand for both assets.
- Retreat linked to easing US-Iran tensions and possible diplomatic deal.
- Debasement trade fueled by Middle East conflict and inflation fears.