JPMorgan Analysts Highlight ‘Debasement Trade’ Impact on Bitcoin
JPMorgan – As the U.S. election approaches, JPMorgan analysts are forecasting that a Donald Trump victory could further enhance momentum for bitcoin, largely driven by what they term the “debasement trade” among retail investors.
Retail Investors Embrace the ‘Debasement Trade’
In a report released on Wednesday, Nikolaos Panigirtzoglou, a managing director at JPMorgan, noted that retail investors are increasingly participating in the debasement trade by purchasing bitcoin and gold ETFs. The report highlights a notable retail impulse in the market for meme and AI tokens, which have significantly outperformed other assets.
Record Inflows into Bitcoin ETFs
Net inflows into spot bitcoin ETFs reached $1.3 billion in just the past two days, pushing October’s total inflows to $4.4 billion so far. This surge represents the third-largest month for bitcoin ETF inflows since their inception in January. The increase is attributed to retail interest in alternative assets as a safeguard against currency debasement, according to the analysts.
Institutional Investors’ Caution
Conversely, institutional investors have largely paused their activity in bitcoin futures in recent weeks. The analysts referenced their bitcoin futures position proxy, based on cumulative open interest changes in CME bitcoin futures contracts, indicating a recent overbought condition for bitcoin futures. They stated, “Bitcoin futures have become rather overbought, creating some vulnerability going forward.”
Continued Interest in Gold ETFs
Similar trends are observed in the gold market, where gold ETFs have also experienced sustained inflows, likely driven by retail participation. However, institutional activity in gold futures has similarly slowed down.
Potential Upside in a Trump Win Scenario
The JPMorgan analysts concluded that if a Trump win inspires retail investors to buy risk assets and further embrace the debasement trade, there could be additional upside for both bitcoin and gold prices in such a scenario.
Earlier this month, JPMorgan expressed a bullish outlook for the crypto market in 2025, citing the growing debasement trade and the potential return of Donald Trump as factors contributing to market optimism.
News
