Key Takeaways
- JPMorgan says the 'debasement trade' is here to stay.
- Gold and Bitcoin are becoming structural parts of portfolios.
- 2024 saw a record $78 billion flow into the Bitcoin market.
JPMorgan analysts have emphasized that the “debasement trade,” driven by concerns over inflation and fiat currency devaluation, is becoming a long-term strategy for investors.
Bitcoin and gold are now regarded as essential components of portfolios aiming to hedge against economic instability.
JPMorgan analysts, led by Nikolaos Panigirtzoglou, stated in a January 4 report:
The gold price appreciation over the past year has gone well beyond the moves implied by dollar and real bond yield shifts, and likely reflects the re-emergence of this “debasement trade.”
Gold’s growing importance
Gold’s rising significance is evident in central bank and private investor holdings, including physical gold, ETFs, and other investment products.
These collectively represent a substantial share of non-bank global assets.
Bitcoin market inflows
Bitcoin has seen similar growth in portfolio integration, with 2024 marking a pivotal year.
Analysts reported a record $78 billion in capital inflows into the Bitcoin market, including:
- $27 billion into crypto funds (adjusted for ETF transitions).
- $22 billion in purchases by MicroStrategy alone, accounting for 28% of the total inflow.
- $1 billion in acquisitions by Bitcoin miners.
JPMorgan also noted a $14 billion investment in CME Bitcoin futures and another $14 billion raised by crypto venture capital funds last year.
With these developments, the analysts concluded that Bitcoin and gold have cemented their roles as critical hedges in the global economic landscape.
