Bitcoin and gold exchange-traded funds have posted sizeable withdrawals over the past two weeks, a move JPMorgan analysts link to fading demand for assets used to hedge against currency debasement amid signals of progress in Iran–U.S. talks.
U.S. spot bitcoin ETFs saw net outflows of $733.4 million on Wednesday alone, the largest single-day withdrawal since January 29, according to data cited by JPMorgan. One product accounted for $527.8 million of that total, its second-biggest daily outflow since launch.
The bank said the retreat is broader than a simple rotation between asset classes and points to a wider cooling in the so‑called debasement trade that had gained traction since the start of the Iran conflict.
Futures and momentum signals point to broad pullback
JPMorgan analysts led by Nikolaos Panigirtzoglou said the pattern is visible across futures markets, where institutional traders have cut exposure to both bitcoin and gold.
Their momentum signal framework shows weakening positions among algorithmic traders and commodity trading advisors, indicating that momentum-driven flows into both assets have slowed over the last two weeks. That suggests reduced participation from traders using bitcoin and gold as protection against currency and inflation risks.
Earlier in May, bitcoin had been outperforming gold, with steady inflows into digital-asset funds while gold ETFs struggled to recover earlier redemptions. Bitcoin is now trading around $72,750, roughly 3% lower over the past 24 hours.
Debasement hedge narrative shows signs of strain
The idea of using finite-supply assets as a safeguard against currency devaluation appears to be losing traction as diplomatic discussions between Iran and the U.S. continue, the analysts said.
For months, a core strategy for many market participants has been to buy assets such as bitcoin and gold as a hedge against geopolitical shocks and potential policy-driven debasement. As perceived immediate risks ease, the urgency to hold these hedges has diminished, at least for now.
Bitcoin ETFs see $2.6 billion in two-week outflows
The shift is most visible in U.S. spot bitcoin ETFs. Since around May 15, these products have recorded more than $2.6 billion in redemptions, reversing the steady inflows seen in March and April.
The bank notes the pattern is consistent with some market participants locking in profits after strong performance earlier in the year, rather than simply reallocating to other inflation hedges.
Gold flows turn mixed as some buy the dip
Gold-related products present a more nuanced picture. Global gold ETFs registered net outflows of $1.8 billion in early May, led by withdrawals from North American and Asian funds.
More recent data, however, show a partial turnaround: North American gold ETFs have attracted about $824 million in new assets even as spot prices have retreated from recent highs. This divergence implies that while some are scaling back exposure, others are treating lower prices as a buying opportunity and adding to holdings despite the metal’s weaker dollar value.
Futures positioning shows rising caution in gold
Futures data reinforce the picture of growing caution. Commodity Futures Trading Commission figures show large speculators trimming net long positions in gold futures from 171,600 contracts to 159,800 in the latest reporting period.
The reduction in bullish exposure suggests more sophisticated traders are moderating their stance, potentially tightening stop-loss levels and reducing leverage rather than exiting the market entirely.
Geopolitics still a key swing factor
The diplomatic backdrop remains uncertain. Progress in Iran–U.S. negotiations has slowed after earlier optimism. The U.S. president has said Washington is “not satisfied” with the talks, and recent U.S. airstrikes on an Iranian military facility have reignited concerns, driving oil prices higher and prompting a selloff in risk-sensitive assets.
JPMorgan notes that any renewed escalation could quickly revive demand for debasement hedges, potentially reversing the recent outflows from bitcoin and gold products if inflation and stability fears return.
Key technical levels and trading dynamics for bitcoin
Market participants are watching bitcoin’s support around the $72,000 area. A sustained break below that level could invite additional selling, with the market currently trading in a defined range capped near $82,000 and a floor now being tested.
Separately, CME Group’s move to offer 24/7 trading in its bitcoin futures and options is altering market microstructure. With the traditional weekend gap effectively removed except for a one-hour Sunday maintenance window, traders may see shifts in volatility patterns and fewer abrupt price jumps linked to reopening gaps.
These factors, combined with shifting geopolitical risk and changing perceptions of the debasement hedge narrative, are likely to dictate short-term flows into both bitcoin and gold-linked products.
For a deeper macro view on how policy shifts move crypto, explore our guide on fiscal policy’s impact on markets.
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