JPMorgan analysts argue Bitcoin could receive stronger support than gold if investors unwind elevated ETF hedging positions.
In a Wednesday report led by Nikolaos Panigirtzoglou, the bank said bitcoin and gold ETFs saw inflows after the Federal Reserve meeting in late July, when the so-called debasement trade returned. However, that trade has weakened over the past week as inflation-adjusted bond yields rose and the U.S. Senate failed to advance the Clarity Act.
Gold ETF demand has recovered more than bitcoin. Gold ETFs have recouped all outflows from earlier this year, while bitcoin ETFs have recovered about half. JPMorgan noted that reduced bitcoin ETF demand in recent days leaves more room for recovery if news flow improves.
Futures positioning in both gold and bitcoin remains high, indicating institutional investors have supported both assets. The bigger difference is in ETF short interest: short interest in BlackRock's iShares Bitcoin Trust ETF (IBIT) remains near its highest level this year, while short interest in the SPDR Gold Shares ETF (GLD) is below its historical average.
The put-to-call open interest ratio is also higher for IBIT than GLD, pointing to more hedging around bitcoin. The analysts concluded: "the more elevated short interest in the IBIT vs. GLD ETF could create more support for bitcoin vs gold from here if hedging demand is reduced."
