JPMorgan said the debasement trade in Bitcoin and gold is losing momentum, with synchronised exchange-traded fund outflows signaling a broad unwind of hedges tied to inflation and US-Iran tensions, according to a research note dated May 28. Nikolaos Panigirtzoglou, a strategist on JPMorgan's Global Markets Strategy team, stated that Bitcoin had been the primary representation of the debasement trade since the onset of the Iran conflict, but argued the trade has reached an inflection point. The bank tied the reversal to fading expectations of a US-Iran confrontation, noting that spot Bitcoin ETFs recorded US$733.43 million of net outflows on May 27 alone and total May outflows from US-listed funds are running near US$2 billion. The note characterised the synchronised capital flight from both Bitcoin and gold ETFs as a broad unwind rather than a rotation between the two assets.
Spot Bitcoin ETFs Record US$733.43 Million May 27 Outflows
Spot Bitcoin ETFs recorded US$733.43 million (AU$1.02 billion) of net outflows on May 27, capping a run of more than US$1 billion (AU$1.39 billion) in redemptions over two trading days. May outflows from US-listed spot Bitcoin funds total roughly US$2 billion (AU$2.78 billion), with BlackRock's IBIT and Fidelity's FBTC accounting for the bulk of the withdrawals.
Gold ETFs are following a similar pattern after a turbulent quarter. Global physically backed gold funds posted a record US$12 billion (AU$16.68 billion) in March outflows, recovered with about US$6.6 billion (AU$9.17 billion) of April inflows, and have seen renewed selling through May. JPMorgan flagged that both assets are bleeding capital at the same time, characterising the move as a broad unwind rather than a rotation from gold into Bitcoin or vice versa.
JPMorgan Links Outflow Reversal to Fading US-Iran Conflict Expectations
The bank said the original surge in the debasement trade tracked the onset of the Iran conflict, and the May unwind coincides with fading expectations of a US-Iran confrontation and growing market discussion of a possible diplomatic resolution. Panigirtzoglou had argued Bitcoin was taking market share from gold, supported by three consecutive months of inflows into spot Bitcoin ETFs while gold funds lagged after Iran-related outflows. The May 28 note added that the market is signaling through ETF flows that the fear trade is losing its grip.
FAQ
What did JPMorgan say about Bitcoin and gold ETFs on May 28?
JPMorgan said in a research note dated May 28 that the debasement trade in Bitcoin and gold is losing momentum, with synchronised ETF outflows signaling a broad unwind of hedges tied to inflation and US-Iran tensions. Strategist Nikolaos Panigirtzoglou stated that Bitcoin had been the primary representation of the debasement trade since the onset of the Iran conflict, but argued the trade has reached an inflection point.
How much did spot Bitcoin ETFs lose on May 27?
Spot Bitcoin ETFs recorded US$733.43 million of net outflows on May 27, capping a run of more than US$1 billion in redemptions over two trading days. Total May outflows from US-listed spot Bitcoin funds are running near US$2 billion, with BlackRock's IBIT and Fidelity's FBTC accounting for the bulk of the withdrawals.
Why does JPMorgan say the debasement trade is unwinding?
JPMorgan tied the reversal to fading expectations of a US-Iran confrontation. The bank said the original surge in the debasement trade tracked the onset of the Iran conflict, and the May unwind coincides with fading expectations of a US-Iran confrontation and growing market discussion of a possible diplomatic resolution.
