Gold and Bitcoin will benefit from a “debasement trade” caused by geopolitical tensions - analyst
Oct. 03, 2024 5:06 PM ET
By: Monica L. Correa, SA News Editor
 koto_feja
Rising geopolitical tensions and the U.S. election are reinforcing a “debasement trade” and favoring both gold ( XAUUSD:CUR) and Bitcoin ( BTC-USD).
Recent geopolitical conflict has shifted attention to alternative asset classes or hedges, such as gold ( XAUUSD:CUR) and Bitcoin ( BTC-USD), said Nikolaos Panigirtzoglou, strategist at J.P. Morgan, in a note.
What analysts call the “debasement trade” is a combination of gold demand factors that reflect higher geopolitical uncertainty in clients and their trade. Those include longer-term inflation backdrop, government deficits, and the diversification away from the dollar, among other things.
Gold futures positions show a rising impulse by speculative institutional investors, such as hedge funds, Panigirtzoglou said.
“It is interesting that there has been a similarly bullish impulse in CME bitcoin futures ( BTC-USD) in recent months, but not ethereum futures ( ETH-USD),” he said. “To us this suggest that speculative institutional investors such as hedge funds might see gold and bitcoin as similar assets…both as beneficiaries of the so-called ‘debasement trade’.”
In addition, bitcoin ETFs began seeing inflows again in September, after outflows in August, suggesting that retail investors “might also see gold ( XAUUSD:CUR) and bitcoin ( BTC-USD) in similar fashion.”
Top U.S. bitcoin ETFs by total assets:
- iShares Bitcoin Trust ETF ( IBIT) – $22.9B in assets
- Grayscale Bitcoin Trust ETF ( GBTC) – $13.95B in assets
- Fidelity Wise Origin Bicoin Fund ( FBTC) – $11.2B in assets
- ARK 21Shares Bitcoin ETF ( ARKB) – $2.9B in assets
- Bitwise Bitcoin ETF Trust ( BITB) – $2.4B in assets
- Grayscale Bitcoin Mini Trust ( BTC) – $2.1B in assets
- ProShares Bitcoin Strategy ETF ( BITO) – $1.8B in assets
- 2x Bitcoin Strategy ETF ( BITX) – $1.6B in assets
- ARK Next Generation Internet ETF ( ARKW) – $1.4B in assets
Lastly, the upcoming U.S. election is expected to reinforce this “debasement trade.”
A Trump victory would reinforce it through higher tariffs, and an expansionary fiscal policy, said Panigirtzoglou. |
