According to a research note by JPMorgan shared with Cointelegraph on January 3, the so-called “debasement trade” involving gold and Bitcoin (BTC) is expected to continue due to persistent geopolitical uncertainty. The bank stated that gold and BTC have become increasingly important components of investors’ portfolios as they seek to hedge against geopolitical risk and inflation. JPMorgan also mentioned the record capital inflow into crypto markets in 2024 as evidence of this trend.
The term “debasement trade” refers to the growing demand for gold and BTC, which can be attributed to various factors such as higher geopolitical uncertainty since 2022, ongoing uncertainty about long-term inflation, and concerns about government deficits in major economies causing “debt debasement,” among others.
Notable investors, including Paul Tudor Jones, are investing in Bitcoin and other commodities due to concerns about inflation in the United States. Additionally, US state governments are adding Bitcoin as a hedge against fiscal uncertainty, as stated by asset manager VanEck in December. JPMorgan also highlighted the increasing open interest on BTC futures as a sign that funds view gold and Bitcoin as similar assets.
Data from CoinGlass showed that net open interest on BTC futures rose from around $18 billion in January to over $55 billion in December 2024.
Furthermore, JPMorgan noted in October that the return of inflows into Bitcoin exchange-traded funds (ETFs) in September, following an outflow in August, suggests that retail investors also view gold and Bitcoin similarly. Bloomberg Intelligence data revealed that US Bitcoin ETFs surpassed $100 billion in net assets in November.
Inflows into crypto ETFs are considered an important metric to monitor as they are likely to represent new funds and participants entering the crypto space, according to a December report by Citi shared with Cointelegraph.
Asset manager Sygnum Bank predicted in December that surging institutional inflows could cause positive “demand shocks” for Bitcoin, potentially leading to a significant increase in BTC’s price in 2025.