JPMorgan: Bitcoin, Gold ETF Outflows Mark Cooling Hedge Trade

JPMorgan analysts led by managing director Nikolaos Panigirtzoglou reported that U.S. spot bitcoin and gold exchange-traded funds have seen net outflows over the past two weeks. The team found larger withdrawals from bitcoin ETFs than from gold funds and described the pattern as a cooling of the so-called debasement trade.

The analysts wrote that the flows appear consistent with investors retreating from hedges tied to fiat currency weakness and geopolitical risk, rather than rotating directly from bitcoin into gold. They said the trend showed up across both ETF and futures markets in the United States over the last two weeks, indicating reductions in institutional exposure to both assets.

On Wednesday, BlackRock’s IBIT bitcoin ETF recorded an outflow of $527.8 million, its second-largest daily withdrawal since launch. U.S. spot bitcoin ETFs registered $733.4 million in net outflows on that day, the largest single-day exit since Jan. 29. Bitcoin traded around $72,750 and was down roughly 3% over the prior 24 hours.

JPMorgan’s report noted similar behavior in futures markets, with institutional positioning cut in both bitcoin and gold contracts. The analysts said bitcoin futures experienced a larger pullback because bitcoin had been a primary vehicle for the debasement trade since the start of the Iran conflict.

The report’s momentum signal framework flagged weakening positioning by momentum-focused traders, including commodity trading advisors. The analysts observed that positioning buildups by these traders in both bitcoin and gold lost momentum in the past one to two weeks.

The debasement trade refers to buying assets such as bitcoin and gold as hedges against geopolitical instability, potential currency weakening and inflation. “The outflows appear more consistent with a broad retreat by investors from the debasement trade,” the report said.