JPMorgan Analysts Question Bitcoins Digital Gold Narrative as Gold Sees Stronger Demand
In a report shared by JPMorgan, the analysts, led by managing director Nikolaos Panigirtzoglou, noted that Bitcoins year-to-date performance has been overshadowed by the rise in demand for gold, which continues to benefit from the debasing trade.
Gold Outshines Bitcoin in the Debasement Trade
The debasement trade strategy is used by investors to hedge against inflation, long-term debt, and the devaluation of fiat currencies by buying assets like gold and Bitcoin. While gold has seen strong demand this year, reaching over $3,100 per ounce, Bitcoin has lagged behind. According to JPMorgan, golds strong performance reflects the intensification of this trade, with investors increasingly favoring gold over Bitcoin.
The analysts pointed out that Bitcoins volatility, higher risk, and its correlation with technology stocks have contributed to its underperformance in 2025. Unlike gold, which is often seen as a safe haven asset, Bitcoins price movements are more influenced by market sentiment around riskier tech stocks, which diminishes its status as a stable store of value.
ETF and Futures Trends Show Investor Shifts
The report also highlighted a shift in investor behavior, as Bitcoin spot exchange-traded funds (ETFs) have seen outflows over the past two months, in contrast to continued inflows into gold ETFs. This suggests that private investors have been turning to gold during February and March, possibly in response to Bitcoins volatile price swings.
Additionally, Bitcoin futures positions have turned negative since mid-January, while gold futures have remained relatively flat. This pattern further suggests that the demand for gold is driven more by long-term investors, including private investors and central banks, rather than speculative traders.
Golds Record High Allocations
Golds appeal has been supported by both central banks and private investors, driving global allocations to a record high. Analysts estimate that approximately $9 trillionor 3.5% of global financial assetsare now held in gold, with central banks holding around $4 trillion and private investors holding $5 trillion.
This strong demand for gold reflects growing concerns over inflation and the weakening of fiat currencies, prompting a shift away from more volatile assets like Bitcoin in favor of golds stability.
Bitcoins Price
Additionally, JPMorgan placed Bitcoins volatility-adjusted value at around $71,000, considering Bitcoins higher risk compared to gold.
When asked if the $62,000 and $71,000 levels could act as support for Bitcoin, Panigirtzoglou affirmed that they could, especially the production cost level, which has historically been seen as a price floor for Bitcoin.
Conclusion
While Bitcoin remains an attractive asset for some investors, JPMorgans analysis suggests that it faces increasing competition from gold, particularly as a hedge against economic uncertainty. The shift in investor behavior, with more funds flowing into gold rather than Bitcoin, could signal a longer-term trend where gold continues to strengthen its position as the preferred asset for protecting wealth during times of market instability.
For Bitcoin to regain its stature as digital gold, it may need to address its volatility issues and decouple its price from the broader tech stock market, offering a more stable alternative to traditional safe haven assets like gold.
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Text source: Coindoo
