The decreasing demand for hedging in Bitcoin ETFs may provide stronger support for the cryptocurrency compared to gold, according to a report from JPMorgan cited by The Block.
Bank analysts noted that following the Federal Reserve's meeting in late July, there was a simultaneous influx of funds into both cryptocurrency and precious metal funds.
This trend was linked to a resurgence of the debasement trade strategy. However, this momentum weakened after the Federal Reserve's interest rate hike in September.
JPMorgan attributed this shift to the rising yields on inflation-adjusted bonds and the failure of the CLARITY Act legislation.
The bank estimates that gold ETFs have already accounted for the outflow since the beginning of the year, while Bitcoin products have recouped about half of their losses.
Source: The Block.Recently, the demand for crypto funds has continued to decline, leaving room for recovery if the news environment improves, analysts believe.
Positioning in the futures market for both gold and Bitcoin remains high. JPMorgan interprets this as a sign of strong support for both assets from institutional investors.
A key difference highlighted by the bank is in the hedging via ETFs. Short interest in the BlackRock iShares Bitcoin Trust ETF (IBIT) remains near this year's highs, while the largest gold fund, SPDR Gold Shares ETF (GLD), is below its historical average.
Source: The Block.The ratio of open interest in put and call options for IBIT is also higher than that for GLD.
"This contrast indicates that Bitcoin is still facing greater market skepticism than gold, possibly due to higher demand for hedging, despite the recent influx of funds and the buildup of positions in the futures markets," JPMorgan stated.
It is worth noting that on September 14, CryptoQuant indicated a signal marking the end of Bitcoin's bearish phase.