JPMorgan analysts suggest that Bitcoin could receive more price support than gold if hedging demand within the exchange-traded fund (ETF) market begins to ease. This comparative analysis, based on current positioning and hedging metrics, indicates Bitcoin faces a more skeptical backdrop.
Bitcoin’s Hedging Landscape
The analysts, led by Nikolaos Panigirtzoglou, highlighted that Bitcoin appears to face a more skeptical positioning backdrop compared to gold, despite recent inflows into Bitcoin funds. They pointed to higher short interest in BlackRock’s iShares Bitcoin Trust (IBIT) and a greater put-to-call open interest ratio for IBIT relative to the SPDR Gold Shares ETF (GLD) as indicators of more significant hedging activity around Bitcoin.
According to data from the August 31 settlement date, short interest in IBIT stood at 45.9 million shares, marking its highest level of the year. This figure represents a 23.8% increase from the 37.1 million shares recorded two weeks prior. The current short position equates to 3.53% of IBIT’s float and would take approximately 0.6 days of average trading volume, estimated at 53 million shares, to cover. This contrasts with the end of March, when IBIT’s short base was near 13 million shares.
Gold’s Contrasting Position
In contrast, JPMorgan analysts observed that short interest in the SPDR Gold Shares ETF (GLD) remains below its historical average. This difference in hedging intensity suggests that investors may be more actively seeking to protect against potential downside in Bitcoin compared to gold.
Flows and Sentiment Shifts
Both Bitcoin and gold funds experienced inflows following the Federal Reserve’s late-July meeting, a period when the “debasement trade” saw a resurgence. Investors appeared to rotate into scarce assets amid concerns over US fiscal policy, which contributed to Bitcoin trading near $80,000 and gold approaching $4,600 per ounce at one point. However, this momentum has since faded as inflation-adjusted bond yields have risen and legislative efforts, such as the CLARITY Act, have stalled.
Recent ETF flow data further illustrates the differing recovery paths. Gold ETFs have fully recovered all outflows experienced earlier in the year. Bitcoin funds, while seeing significant inflows, have only recaptured about half of their earlier outflows. For instance, on September 1, US spot Bitcoin ETFs experienced outflows totaling $236 million, followed by inflows of $731 million on September 3, with IBIT accounting for approximately $454 million of those inflows. As of early September, net assets across Bitcoin ETFs stood at $103.3 billion, representing about 6% of Bitcoin’s market capitalization.
The JPMorgan note also referenced a previous analysis from February, where analysts estimated a volatility-adjusted comparison for Bitcoin to gold at $266,000 per Bitcoin. While deemed an unrealistic target for the current year, it was presented as indicative of Bitcoin’s long-term upside potential once negative sentiment reverses.
Outlook and Uncertainty
The analysts interpret the current data as Bitcoin facing a more skeptical positioning backdrop than gold. The extent to which hedging demand in the ETF market may ease remains a key uncertainty, influencing the potential future price support for Bitcoin relative to gold.
Why This Matters
The materials describe a narrow update: JPMorgan analysts noted that Bitcoin could see more price support than gold if hedging demand in the ETF market eases. The extent to which hedging demand in the ETF market may ease.
Broader Context
Source materials place the market analysis in this context: JPMorgan analysts led by Nikolaos Panigirtzoglou.
