JPMorgan says the “debasement trade” that supported macro hedging this year is losing momentum, with investors cutting exposure to both bitcoin and gold at the same time. In the bank’s view, the parallel outflows suggest markets are dialing back inflation and geopolitical hedges as expectations build around a possible agreement between Washington and Tehran.
The research team, led by managing director Nikolaos Panigirtzoglou, told clients on Thursday that bitcoin and gold ETFs have both seen outflows for two straight weeks. Institutional investors also reduced futures positions in both markets. Panigirtzoglou, who identified the debasement trade as a distinct market force last October, said the latest pattern looks less like a switch from one hedge to another and more like a dismantling of the trade itself.
JPMorgan sees a retreat, not a rotation
The bank’s argument rests on how both assets are moving. A true rotation would usually mean one market absorbs capital leaving the other, with money shifting from bitcoin into gold or the reverse. That is not what current flow data show. Both sides of the trade are weakening, which JPMorgan interprets as investors stepping away from the broader thesis.
That thesis is built on a simple expectation: fiat currencies may lose purchasing power faster than the assets held against them. When traders anticipate heavier government borrowing, looser central bank policy, or inflation tied to geopolitical shocks, they often move into assets that cannot be printed. Gold has filled that role for decades, while bitcoin has increasingly been used in the same way in recent years. Through the spring, JPMorgan had described a phase in which the debasement trade appeared to be shifting from gold toward bitcoin as crypto funds drew stronger inflows.
“These outflows appear to be more consistent with a broad retreat by investors from the debasement trade, potentially in anticipation of an Iran-U.S. deal, rather than with a rotation from bitcoin to gold,” Panigirtzoglou wrote.
ETF and futures signals point in the same direction
The report said that from May 12 to the present, gold ETF prices fell from about $4,759 per ounce to roughly $4,517 per ounce. On the bitcoin side, ETFs started 2026 with $681 million in weekly outflows, a sign that institutions often use these vehicles to adjust exposure quickly instead of treating them as permanent allocations.
The sharper move came in US spot bitcoin ETFs. According to the figures cited in the report, US spot bitcoin ETFs recorded $733.43 million in single-day outflows on the 27th, the largest daily withdrawal since January 29. Analysts described that move as the clearest market expression of the debasement trade since the Iran conflict began, and JPMorgan sees it as evidence that capital is leaving the strategy at speed.
Cooling tensions would weaken the case for both hedges
JPMorgan links the unwind to growing expectations that tensions between the United States and Iran may ease. If traders begin to price in a diplomatic breakthrough, the case for holding bitcoin and gold as inflation insurance or geopolitical protection becomes less compelling, prompting a reassessment of those positions.
The call extends a year of changing signals tracked by the bank. In February, JPMorgan issued a contrarian buy signal after bitcoin volatility fell below gold’s, arguing at the time that the debasement trade had already started to fracture as flows leaned toward precious metals. The current setup looks different. Both hedges are losing support together. At the time of writing, bitcoin traded near $72,890, down about 3.35% on the day and still below $73,000, while equities, bonds, and oil reacted to reports of a possible peace agreement.