JPMorgan Says Bitcoin Overtakes Gold as Top Debasement Trade as ETF Inflows Continue

Elevated U.S. Treasury yields are squeezing richly valued technology shares, while Treasury buybacks and a weaker dollar have revived the “debasement trade” — a shift into assets perceived as scarce or resistant to inflation. Bitcoin and gold sit at the center of that rotation. Tokenized gold products such as Tether’s XAUT and Paxos’ PAXG extend the trade on-chain, offering bullion-linked exposure without the storage costs of bars or the management fees charged by conventional exchange-traded funds.

As of Aug. 24, bitcoin had climbed from about $64,000 to nearly $80,000, posting its best weekly gain in years and moving above its 100- and 200-day averages. Standard Chartered analyst Geoffrey Kendrick said short covering reached its highest level since 2021, while weekly inflows into spot bitcoin ETFs topped $1 billion. He warned his $100,000 year-end target may be too low and said bitcoin could surpass its $126,000 record after Oct. 6. Gold, meanwhile, reached a near three-month high, lifting demand for XAUT and PAXG.

JPMorgan groups Bitcoin and gold under the “debasement trade,” which investors have used to hedge against declining fiat-currency purchasing power and inflation risks. Bitcoin, however, has recently failed to demonstrate resilience as a safe haven, instead tracking risk assets such as US equities more closely. Fund flows have therefore become an important gauge of market confidence. The report did not disclose the cumulative amount invested in the trade.

JPMorgan’s latest report said investors are pulling money from both Bitcoin and gold, with outflows from spot Bitcoin ETFs particularly rapid, indicating that the “debasement trade” has cooled. Analysts remain cautious on cryptocurrencies for the second half of the year because Bitcoin’s safe-haven characteristics have failed to hold. Available information on the event did not provide the report’s date, the observation period or the exact amount of the outflows.

The “debasement trade” involves allocating funds to scarce assets such as Bitcoin and gold as a hedge against inflation, rising government debt, weakening fiat currencies and geopolitical risks. A team led by JPMorgan Managing Director Nikolaos Panigirtzoglou said simultaneous outflows from both asset classes pointed to weaker demand for macro hedges, rather than a rotation from Bitcoin into gold.

JPMorgan said in a May 28, 2026, report that both Bitcoin and gold ETFs had recorded outflows over the previous two weeks, while institutional investors had also reduced futures positions. U.S. spot Bitcoin ETFs posted net outflows of $733.4 million on May 27, the largest single-day total since January 29. BlackRock’s IBIT recorded $527.8 million in outflows, its second-highest since listing, as markets bet that the United States and Iran could reach an agreement and inflationary pressures would ease.

Bitcoin and gold are both viewed by markets as stores of value that can hedge against inflation and currency depreciation. The ratio of Bitcoin’s price to the price of an ounce of gold offers a gauge of investor preference. The ratio rose from about 12 to 18 from early March 2026, making its reversal significant for safe-haven asset allocation.

CoinDesk reported on May 27, 2026, that the Bitcoin-to-gold ratio had broken below its three-month rising trendline over the previous 24 hours. Bitcoin funds recorded more than $2 billion in outflows over two weeks. LSEG Lipper data showed that gold and precious-metals ETFs attracted $2.34 billion in the week ended May 20, marking a second consecutive week of inflows.

Bitcoin is often described as “digital gold” because of its capped supply and decentralized nature, while also serving as both a portfolio allocation and a growth-oriented risk asset. The U.S. Securities and Exchange Commission approved 11 spot Bitcoin ETFs on January 10, 2024. The products began trading the next day and generated about $4.6 billion in first-day volume, giving traditional investors easier access to the market.

Bloomberg Intelligence ETF analyst James Seyffart recently predicted that spot Bitcoin ETFs will eventually surpass gold ETFs in total size, though he gave no specific target or timeline. He said Bitcoin has more varied uses than gold, offering a hedge, diversification and growth exposure. He likened it to “hot sauce” in a portfolio: even a small allocation can add risk and return potential.

Global geopolitical tensions have driven oil prices higher and triggered simultaneous declines in stocks and bonds, straining market liquidity. JPMorgan said gold liquidity has fallen below that of Bitcoin. Bitcoin has shown relative resilience as safe-haven assets are repriced, drawing attention to whether digital assets can capture demand that might otherwise flow into gold.

Gold recently fell below $4,500 and crude oil climbed above $110 a barrel, while equity and credit markets weakened in tandem. Bitcoin nevertheless held the $70,000 level and outperformed gold. Bitcoin ETFs recorded more than $1.1 billion in net inflows in March, while the total market capitalization of altcoins had risen about 12% from early February as of the latest reporting.