According to a May 7 report by The Block, JPMorgan Chase directors and managing director Nikolaos Panigirtzoglou and his team of analysts said in a latest report that since the outbreak of the Iran conflict, the target assets for “devaluation trades” by investors have been shifting from gold to Bitcoin. Bitcoin ETFs have recorded net inflows for a third consecutive month in May, while gold ETFs are still struggling to recover from the March period when they saw capital outflows.
A structural shift in ETF fund flows: Gold is bleeding, while Bitcoin logs net inflows for a third month in a row
JPMorgan analysts had already noticed in early March a clear divergence in fund flows between Bitcoin and gold ETFs, and the latest report further confirms the persistence of this trend. Since the Iran conflict broke out in March, gold ETFs have faced ongoing pressure from sustained fund outflows and have yet to fully recover what was lost; Bitcoin ETFs, in contrast, have shown an entirely different trend, recording net inflows for three consecutive months.
The analysts directly characterize this as a structural shift in investor preference: “The target asset for devaluation trades has shifted from gold to Bitcoin.” So-called “devaluation trades” refer to when investors buy assets such as Bitcoin or gold to hedge against the risk of weakening purchasing power of fiat currency—an approach that is especially active during periods of rising geopolitical uncertainty or inflation concerns. Momentum signals for both Bitcoin and gold (used as position reference by Commodity Trading Advisors, or CTAs, among others) have rebounded after the outbreak of the conflict, but the divergence in fund flows indicates that Bitcoin’s relative appeal is continuing to rise.
Institutional investors move in sync: CME futures open interest keeps setting new highs
JPMorgan analysts emphasized that this round of Bitcoin add-on buying is not limited to ETF trading by retail investors. Based on institutional positioning indicators such as CME Bitcoin futures and offshore perpetual contracts, which have repeatedly hit new highs, it shows that institutional investors are increasing their Bitcoin exposure in parallel through the derivatives market.
In addition, the analysts noted that another indirect allocation channel used by both institutions and retail investors is holding Strategy stock (formerly MicroStrategy). Currently, ownership of Strategy is almost evenly split between retail and institutional investors, making its large-scale coin hoarding behavior a transmission mechanism through which both types of investors indirectly increase their Bitcoin exposure together.
Strategy accelerates coin hoarding, JPMorgan estimates annual Bitcoin purchases could reach $30 billion
Strategy is still the world’s largest corporate holder of Bitcoin, and it has been accelerating its accumulation this year. According to JPMorgan’s forecast, if Strategy’s current pace of adding continues, the scale of Bitcoin purchases over the full year could reach about $30 billion. This would have a sustained and significant structural impact on the market’s supply-demand structure.
Frequently asked questions
What is “devaluation trade,” and why is Bitcoin replacing gold as the main target?
A devaluation trade refers to buying assets that hedge against inflation or currency devaluation to offset the risk of fiat purchasing power declining. Traditionally, gold has represented this category. JPMorgan analysts believe that after the Iran conflict, investors’ preferences for Bitcoin have shown a clear relative advantage in ETF fund flows. Bitcoin is gradually taking on part of the traditional role of gold, particularly in market conditions where geopolitical uncertainty is heating up.
What channels are institutional investors using to participate in Bitcoin allocation today?
There are three main channels: direct allocation through spot Bitcoin ETFs; establishing leveraged exposure through CME Bitcoin futures and offshore perpetual contracts (with JPMorgan’s positioning indicators repeatedly hitting new highs); and indirectly obtaining Bitcoin exposure by holding Strategy stock, whose ownership structure is almost evenly distributed between institutional and retail investors.
What would JPMorgan’s forecast of $30 billion in annual Bitcoin purchases by Strategy mean for the market?
If the $30 billion annualized purchase scale comes true, it would provide a notable structural support on the demand side of the Bitcoin market—tightening the circulating supply available in public markets—and could further strengthen the narrative of Bitcoin’s scarcity. However, this forecast hinges on Strategy maintaining its current pace of accumulation and on market conditions allowing continued large-scale financing.
