Investors have continued to move away from the so-called debasement trade, with the retreat accelerating for bitcoin while continuing for gold, according to JPMorgan analysts.
Gold exchange-traded funds saw around $20 billion of outflows in the week through June 5 after modest inflows the previous week, while bitcoin ETFs have recorded gradually increasing outflows over the past four weeks, JPMorgan analysts led by managing director Nikolaos Panigirtzoglou said in a report.
"We see broad based retreat of the debasement trade by both retail and institutional investors," the analysts said. "This retreat from the debasement trade has continued for gold and if anything accelerated for bitcoin in recent weeks."
The debasement trade refers to investor demand for bitcoin and gold driven by concerns including geopolitical uncertainty, persistent inflation, rising government debt, weakening confidence in fiat currencies and diversification away from the U.S. dollar. According to the analysts, that trade has been fading in recent weeks across ETFs, futures markets and investor positioning.
Institutional investors have also continued reducing exposure through futures markets. Gold positioning has steadily declined since late February, while bitcoin, which had been the main expression of the debasement trade since the start of the Middle East conflict, began reversing in early May and has since weakened further, the analysts said.
