The "debasement trade" that fueled strong demand for bitcoin and gold during recent geopolitical tensions is starting to fade, according to JPMorgan analysts led by Nikolaos Panigirtzoglou. In a Thursday report, the bank said investors have begun withdrawing capital from both bitcoin and gold exchange-traded funds at the same time, while institutions cut exposure in CME futures for both assets.
Simultaneous Outflows from ETFs and Futures
Data from Farside Investors shows significant outflows from bitcoin ETFs over the past two weeks, mirroring gold ETFs. CME bitcoin and gold futures positions have also weakened over the same period. Panigirtzoglou argued the move does not reflect a rotation from bitcoin into gold but rather softer demand for both assets concurrently. "Bitcoin had been the main manifestation of the debasement trade since the start of the Iran conflict," the report said.
The debasement trade refers to investors positioning in assets viewed as stores of value during periods of inflation fears or currency weakness. Bitcoin and gold often benefit when traders expect governments and central banks to increase spending, expand debt, or keep monetary policy loose. Those concerns intensified earlier this year after renewed conflict in the Middle East pushed oil prices higher and heightened worries about inflationary pressures.
Geopolitical Détente Triggers Hedge Unwinding
JPMorgan said the recent pullback may reflect growing expectations that tensions between the United States and Iran could ease. The report suggested investors may be positioning ahead of a possible diplomatic agreement between the two countries, reducing the need for inflation and geopolitical hedges that had previously supported bitcoin and gold. The simultaneous withdrawal across both assets signals a broader shift in macro hedging logic rather than a simple asset rotation.