JPMorgan sees room for Bitcoin ETF recovery

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Bitcoin could attract stronger support than gold if investors unwind some of their ETF hedges, according to JPMorgan analysts led by Nikolaos Panigirtzoglou.

Both Bitcoin and gold ETFs saw inflows after the Federal Reserve meeting in late July as the so-called debasement trade returned. JPMorgan said the trend has weakened over the past week as inflation-adjusted bond yields rose and the Senate failed to advance the Clarity Act.

Gold ETFs have recovered all their earlier outflows, while Bitcoin ETFs have recouped about half. Bitcoin ETF demand has also weakened in recent days, leaving more scope for a recovery if market sentiment improves.

Futures positioning in both assets remains elevated, suggesting institutional investors continue to support Bitcoin and gold, the analysts said.