Bitcoin and gold exchange-traded funds have experienced outflows over the past two weeks, with JPMorgan analysts attributing the trend to a cooling debasement trade amid potential Iran-U.S. deal anticipation. BlackRock's IBIT bitcoin ETF recorded an outflow of $527.8 million on Wednesday, its second-largest daily outflow since launch, while U.S. spot bitcoin ETFs collectively saw $733.4 million in net outflows on Wednesday, marking their largest daily outflows since Jan. 29, according to SoSoValue data. The debasement trade refers to investors buying assets such as bitcoin and gold as hedges against geopolitical instability, fiat currency weakness, inflation, and related economic concerns.
Market Data on ETF Outflows
Bitcoin ETFs have seen larger outflows compared to gold ETFs over the past two weeks, according to JPMorgan analysts led by managing director Nikolaos Panigirtzoglou. BlackRock's IBIT bitcoin ETF recorded an outflow of $527.8 million on Wednesday. Overall, U.S. spot bitcoin ETFs recorded $733.4 million in net outflows on Wednesday, according to SoSoValue data. Bitcoin is currently trading around $72,750, down nearly 3% over the past 24 hours, according to The Block's bitcoin price page.
Analyst Interpretation of Debasement Trade Dynamics
The outflows appear more consistent with a broad retreat by investors from the debasement trade, potentially in anticipation of an Iran-U.S. deal, rather than with a rotation from bitcoin into gold, the JPMorgan analysts said in a report. Until earlier this month, bitcoin was outperforming gold as the debasement trade following the Iran conflict, the JPMorgan analysts had noted, as bitcoin ETFs were attracting inflows while gold ETFs struggled to recover earlier outflows.
Futures Market and Institutional Positioning
The same trend is visible in futures markets, where institutional investors appear to have reduced exposure to both bitcoin and gold over the past two weeks, the analysts said. Bitcoin futures saw a more significant retreat because bitcoin had become one of the main expressions of that trade since the start of the Iran conflict, the analysts noted. JPMorgan's momentum signal framework pointed to weakening positioning from momentum-focused traders such as commodity trading advisors, or CTAs. Positioning buildup from those traders lost momentum in both bitcoin and gold over the past one to two weeks, the analysts said.
