TheBlock
JPMorgan analysts led by Nikolaos Panigirtzoglou say Bitcoin could receive more support than gold if investors reduce their ETF hedges. Both Bitcoin and gold ETFs drew inflows after the Federal Reserve meeting in late July, as the debasement trade returned, but that trend weakened over the past week as inflation-adjusted bond yields rose and the Senate failed to advance the Clarity Act. Gold ETFs have recovered all of their earlier-year outflows, while Bitcoin ETFs have recovered about half.
Why it matters
The analysts see positioning, rather than recent inflows alone, as the key difference between the two assets. Futures positioning remains high in both gold and Bitcoin, indicating strong institutional participation. But short interest in BlackRock's iShares Bitcoin Trust, or IBIT, remains near its highest level this year, while short interest in the SPDR Gold Shares ETF, or GLD, is below its historical average.
The put-to-call open interest ratio is also higher for IBIT than GLD, pointing to heavier hedging around Bitcoin. That leaves Bitcoin with a more skeptical positioning backdrop despite the build-up in futures exposure.
Market impact
JPMorgan said Bitcoin's recent ETF demand has weakened, creating more room for a recovery if the news flow improves. The analysts concluded that elevated short interest in IBIT compared with GLD could provide more support for Bitcoin than gold if hedging demand declines.
The near-term signals to watch are ETF flows, inflation-adjusted bond yields, progress on the Clarity Act and changes in IBIT short interest. A reduction in hedges would strengthen the positioning case for Bitcoin, while persistent hedging would keep gold in the stronger relative position.
Frequently asked questions
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Why does JPMorgan see more upside support for Bitcoin than gold?
JPMorgan says Bitcoin has heavier ETF hedging than gold, so a reduction in that hedging could create stronger support for Bitcoin from a positioning reset.
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How have Bitcoin and gold ETF outflows recovered?
Gold ETFs have recovered all of their outflows from earlier this year, while Bitcoin ETFs have recovered about half of theirs.
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What is the positioning difference between IBIT and GLD?
Short interest in BlackRock's IBIT remains near its highest level this year. Short interest in the SPDR Gold Shares ETF, GLD, is below its historical average.
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What does the IBIT put-to-call ratio indicate?
The higher put-to-call open interest ratio for IBIT points to more hedging around Bitcoin than around GLD.
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What factors could influence Bitcoin's relative performance next?
ETF flows, inflation-adjusted bond yields, progress on the Clarity Act and changes in IBIT short interest could shape the relative positioning of Bitcoin and gold.
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