JPMorgan analysts led by managing director Nikolaos Panigirtzoglou reported that bitcoin is gaining over gold as the debasement trade following the Iran conflict, citing continued inflows into bitcoin exchange-traded funds while gold ETFs struggle to recover losses. According to the analysts, retail investors are increasingly choosing bitcoin over gold to protect against weakening fiat currencies during geopolitical tensions. The shift reflects what JPMorgan describes as “the debasement trade rotates from gold to bitcoin.”
Retail Investor Flows and ETF Performance
Bitcoin ETFs have attracted inflows for a third consecutive month in May, according to JPMorgan analysts. In contrast, gold ETFs remain unable to recover the outflows they experienced in March when the Iran conflict began. This divergence in ETF flows suggests retail investors are actively rotating capital from gold into bitcoin as their preferred hedge against currency debasement.
The debasement trade, as defined by the analysts, refers to investors purchasing assets like gold or bitcoin to protect against weakening fiat currencies, particularly during periods of geopolitical tension or inflation concerns.
Institutional and Indirect Demand
Bitcoin buying extends beyond retail investors through ETFs. JPMorgan’s positioning proxies based on CME bitcoin futures and offshore perpetual futures have reached new highs, indicating that institutional investors have also increased their exposure. Additionally, momentum signals for bitcoin—used as positioning proxies by momentum traders such as commodity trading advisors—have rebounded since the Iran conflict began.
Indirect institutional participation is occurring through MicroStrategy, whose ownership is split almost equally between retail and institutional investors. MicroStrategy remains the largest corporate holder of bitcoin globally and has been accumulating bitcoin at an accelerated pace this year. According to JPMorgan analysts, if the current accumulation rate continues, MicroStrategy’s bitcoin purchases could reach approximately $30 billion by year-end.
Market Price
Bitcoin was trading at approximately $80,120, down 1.6% over the preceding 24 hours, according to the report.
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