Investors are moving away from hedge strategies, with funds flowing out of both Bitcoin ETFs and gold-based funds. This trend has been noted by analysts at JPMorgan, as reported by The Block.
From June 1 to June 5, exchange-traded products based on precious metals lost approximately $20 billion. Funds have been exiting Bitcoin for the fourth consecutive week, with the pace of withdrawals increasing.
Spot Bitcoin ETF trends. Source: SoSoValue.“We are witnessing a broad retreat from this strategy among both retail and institutional investors. The trend has continued for gold and accelerated for Bitcoin in recent weeks,” the bank stated.
JPMorgan defines hedge strategies as the demand for alternative assets to protect against the devaluation of fiat currencies. Analysts estimate that in recent weeks, this trend has weakened not only in ETFs but also in futures markets and investor positioning.
The decline in interest for gold has been ongoing since late February, while the downturn for Bitcoin began in early May, following a brief surge due to the conflict in the Middle East.
JPMorgan also assessed the share of non-bank investors' allocations in gold and Bitcoin relative to stocks, bonds, and cash. After a steady increase since mid-2022, this metric has shown a significant decline.
Source: JPMorgan/The Block.JPMorgan noted that the correlation of Bitcoin with the real yield of 10-year U.S. Treasury bonds has recently turned negative, similar to gold earlier this year.
In contrast, the relationship between the precious metal and the S&P 500 has become positive. The bank estimates that in recent months, both assets have behaved more like risk assets.
However, the company acknowledged that weak market sentiment could eventually signal a "bullish countertrend signal."
It is worth noting that Bitwise has observed a shift in interest from Bitcoin to stablecoins and tokenized assets among consultants.