Bitcoin sees stronger demand if ETF hedging eases

Bitcoin could attract stronger relative demand than gold if traders unwind hedges linked to BlackRock’s iShares Bitcoin Trust (IBIT), according to a JPMorgan note led by Nikolaos Panigirtzoglou. The bank identified unusually heavy short interest and options hedging in the Bitcoin ETF as a potential source of support for the asset if market sentiment improves.

JPMorgan’s argument centers on positioning rather than a simple comparison of recent fund flows. Gold exchange-traded funds have recovered more quickly from earlier withdrawals in 2026, while Bitcoin ETFs have regained only about half of their prior outflows, the note said. That leaves gold with the stronger recent flow trend, but Bitcoin with more scope for an ETF-demand rebound if defensive trades begin to fade.

The report said both Bitcoin and gold ETFs attracted inflows after the Federal Reserve’s late-July meeting, alongside a revival of the so-called debasement trade. The term generally describes demand for assets viewed as potential hedges against currency weakness, rising government debt or persistent inflation.

That trade lost momentum over the past week as inflation-adjusted bond yields increased and the U.S. Senate did not advance the Clarity Act, JPMorgan said. Higher real yields can reduce the appeal of non-yielding assets such as gold and Bitcoin, since holding them carries a larger opportunity cost relative to government bonds.

Bitcoin ETF hedging remains elevated

The clearest distinction in JPMorgan’s comparison was the level of hedging around the two largest U.S.-listed funds for the assets. Short interest in IBIT remained close to its highest point of the year, the bank said, while short interest in the SPDR Gold Shares ETF, known as GLD, sat below its historical average.

Short interest measures shares borrowed and sold by traders expecting to repurchase them later, potentially at a lower price. In ETFs, such positions can serve several purposes beyond a straightforward bearish bet. Traders may short an ETF to hedge exposure held elsewhere, run relative-value strategies, or offset risk from options positions.

A reduction in IBIT short interest would require traders to buy back borrowed shares, potentially adding demand for the fund. The effect on Bitcoin itself would depend on the scale of the activity and on how ETF market makers and authorized participants manage their underlying exposure. JPMorgan’s view is that the positioning gap gives Bitcoin more potential support than gold if hedging demand recedes.

Options data pointed in the same direction. JPMorgan said IBIT’s put-to-call open-interest ratio was higher than GLD’s, indicating that Bitcoin ETF traders have taken more downside protection relative to upside exposure than their gold counterparts. Put options are commonly used to protect against price declines, while calls are generally associated with bullish exposure.

The bank did not portray futures markets as a clear differentiator. Futures positioning in both Bitcoin and gold remained elevated, according to the note, suggesting that neither market has a uniquely light speculative footprint. Its focus instead was on the additional layer of defensive positioning in IBIT.

Gold has led the ETF recovery

Gold’s flow recovery remains the more established trend. JPMorgan said gold ETFs had recovered all of their earlier 2026 outflows, while Bitcoin ETF flows had only partly retraced their previous decline. The difference suggests that traders seeking protection from macroeconomic and policy uncertainty have returned to gold more consistently.

Bitcoin’s weaker recovery has also reflected its sensitivity to swings in real yields and shifting risk appetite. Gold has historically attracted demand during periods of market stress, while Bitcoin can trade both as a macro hedge and as a higher-volatility risk asset. That mixed behavior can lead to sharper reversals when interest-rate expectations or political headlines change.

JPMorgan’s analysis does not suggest that existing IBIT shorts automatically translate into immediate buying pressure for Bitcoin. Many positions may remain in place while traders seek protection against price declines, manage options exposure or maintain broader portfolio trades. A sustained easing in hedges would likely require a more constructive market backdrop, including steadier ETF inflows and reduced demand for downside insurance.

A $170,000 model estimate depends on volatility

The bank’s quantitative work also compared Bitcoin’s price behavior with gold on a volatility-adjusted basis. JPMorgan’s model placed Bitcoin near $170,000 if the two assets were assigned comparable risk levels by large market participants.

That estimate is a model output rather than a near-term forecast. Bitcoin has generally experienced substantially larger price swings than gold, and a volatility-adjusted comparison reduces the amount of Bitcoin that a risk-sensitive portfolio would hold relative to gold. Reaching the bank’s implied level would therefore depend on assumptions about demand, volatility and the willingness of large traders to treat Bitcoin as a more established macro allocation.

For now, JPMorgan’s positioning data presents a more immediate signal than its long-term valuation framework. Gold has attracted steadier ETF demand, but Bitcoin’s ETF market carries more visible hedging. If those short and options positions begin to unwind, IBIT could receive a flow-driven lift that gold’s less-defensively positioned ETF market may be less likely to match.