JPMorgan: The tide of currency devaluation trades recedes, why are BTC and gold no longer considered safe-haven assets?

Since 2026, the global cryptocurrency and commodities markets have continued to come under pressure. A recent research report from JPMorgan Chase indicates that investors are persistently withdrawing from the so-called "currency devaluation trades," with gold-related allocations still declining, and the retreat of Bitcoin accelerating further in recent times. This assessment has prompted a reevaluation of the pricing logic for these two asset classes.

As of June 12, 2026, according to data from Gate.io, Bitcoin has been oscillating repeatedly between $60,000 and $65,000, with a significant cumulative pullback since early May. Meanwhile, gold prices have fluctuated around $4,200 per ounce, also experiencing a phased correction. Both assets, traditionally viewed as "hedges against fiat currency devaluation," are under simultaneous pressure, driven by a common underlying logic that warrants in-depth analysis.

What are the market signals indicating a retreat of currency devaluation trades

JPMorgan's analysis team points out that "currency devaluation trades" refer to the behavior of investors buying Bitcoin and gold in response to geopolitical uncertainties, rising inflation, government debt expansion, and the need for diversification of the dollar. However, in the week ending June 5, gold ETFs experienced approximately $20 billion in outflows; Bitcoin ETFs have recorded net outflows for four consecutive weeks, with the scale gradually increasing.

ETF fund flows are a high-frequency window into institutional investor behavior changes. Four consecutive weeks of net outflows are not explainable by short-term sentiment fluctuations alone; they indicate a systematic adjustment in institutional allocation strategies. Data from the futures market also confirms this—retail and institutional investors are both reducing their positions in gold and Bitcoin futures, suggesting a broader market withdrawal from assets associated with currency devaluation and geopolitical risks.

The decline in liquidity in ETF and futures markets directly amplifies Bitcoin's price corrections. The shrinking market depth means that any capital flow in either direction can cause larger price impacts, making price recovery more difficult.

Why are Bitcoin and gold losing their safe-haven attributes

One of the core observations in JPMorgan's report is the restructuring of asset correlations. The report notes that the correlation between Bitcoin and the 10-year U.S. Treasury real yield has recently turned negative. The correlation between gold and the S&P 500 is closer to the positive correlation between Bitcoin and stocks, indicating that both have recently behaved more like risk assets.

This shift has important implications for pricing. In traditional asset pricing models, gold's safe-haven property is based on its low or even negative correlation with stocks. When this correlation moves toward positive, gold loses its core value as a diversification tool. Bitcoin, once portrayed as "digital gold," has also seen its correlation with macro variables change.

Since the Middle East conflict, Bitcoin has been one of the main expressions of "currency devaluation trades." But since early May, this trend has reversed, with recent declines deepening. The so-called "safe-haven assets" can also exhibit strong risk asset characteristics under certain macro environments—Bitcoin and gold's current movements are a testament to this reality.

What are the deeper drivers behind the continued capital outflows

The persistent ETF outflows can be dissected from two dimensions.

First is the change in the return structure of the "currency devaluation trade" itself. When inflation remains above the Federal Reserve's target and real yields decline, Bitcoin and gold indeed serve as hedges; but as the Fed maintains a high interest rate stance, the opportunity cost of holding non-yielding assets rises sharply. As of mid-June 2026, the 10-year U.S. Treasury yield remains around 4.5%, making the risk-free rate at this level significantly increase the opportunity cost of holding gold and Bitcoin.

Second is the concentration of capital allocation structures. Data shows that as of June 11, the U.S. spot Bitcoin ETF experienced a fourth consecutive day of net outflows, totaling over $4.4 billion. Among these, BlackRock's IBIT saw a daily net outflow of about $148 million, and Grayscale's GBTC experienced net outflows of approximately $87.9 million. This indicates that the current withdrawal is not dispersed across all ETF products but is highly concentrated in a few institutional-grade products—precisely those that represent "formal funding channels."

The total net asset value of Bitcoin spot ETFs has fallen to about $77.33 billion, with a cumulative net inflow of approximately $53.56 billion historically. The intensity and concentration of the outflows suggest that institutional investors' asset allocation logic is undergoing a systematic restructuring.

How do high inflation and high interest rates reshape the asset pricing environment

Understanding this round of capital outflows requires attention to the latest macroeconomic data from the U.S. Inflation data for May shows a year-over-year increase of 4.2%, reaching a new high since May 2023, up from 3.8% in April. This inflation surge is mainly driven by energy prices, which jumped 3.9% month-over-month, contributing over 60% to the CPI increase.

While inflation remains high, the Fed's stance on maintaining interest rates unchanged is very clear. The CME FedWatch tool indicates a 98.5% probability that the Fed will keep rates steady at the June 17 FOMC meeting. Meanwhile, markets are beginning to price in the possibility of rate hikes before the end of the year, with the 10-year U.S. Treasury yield holding around 4.5%, and the dollar index DXY trading near 99.90.

This macro environment exerts dual pressures on "currency devaluation trades": high inflation should boost safe-haven demand, but the elevated holding costs in a high-interest-rate environment, along with expectations of further tightening, are weakening the appeal of Bitcoin and gold. Both assets are caught between "inflation hedging needs" and "interest rate cost constraints," forcing a reconfiguration of their pricing logic.

How the outflows from ETFs transmit through to institutional behavior

The impact of ETF outflows is not simply equivalent to "funds exiting the market." Understanding the transmission mechanism requires distinguishing between primary market redemptions and secondary market trading. When investors redeem ETF shares, authorized participants need to sell underlying Bitcoin in the open market to meet redemption payments, which directly transmits selling pressure to the spot market.

A more common transmission pathway is through market makers' risk hedging mechanisms. When market makers sell ETF shares, they typically hedge their positions in futures or perpetual contracts. When market directions reverse, these hedges can trigger chain reactions—especially when leverage levels are high. Given that this withdrawal cycle has lasted over three weeks and the scale has gradually expanded, its impact on market liquidity is also cumulatively increasing.

It should be noted that not all ETF net outflows immediately translate into selling pressure in the spot market. The impact varies significantly depending on the type of capital exiting. Hedge funds' trading behaviors differ fundamentally from long-term allocators; the former are more strategy-driven rebalancing, while the latter reflect structural changes in asset class perceptions.

What prerequisites are needed for market recovery in the second half of the year

JPMorgan analysts point out that whether the crypto market can improve in the second half depends on two key factors: whether crypto treasury companies can provide clearer arrangements for dividend payments, and whether the U.S. Clarity Act can be passed.

From a regulatory perspective, the Clarity Act was passed by the Senate Banking Committee in May 2026 with bipartisan support, having previously gained broad support in the House. If ultimately enacted, it will clearly delineate the regulatory authority between the SEC and CFTC, providing a clearer legal framework for the market positioning of crypto assets.

However, analysts believe the probability of its passage within this year is below 50%. Regulatory uncertainty remains a core obstacle to the institutionalization of the crypto market. Additionally, whether crypto treasury companies can offer clear dividend arrangements directly affects institutional investors' cash flow assessments of related assets.

It is also noteworthy that analysts suggest the current market weakness might ultimately serve as a "bullish contrarian signal." This implies that as the "currency devaluation trade" recedes, the structural bottom of the market may form alongside a phase of panic selling and capitulation.

How should asset allocation logic be reconsidered

The essence of the retreat of "currency devaluation trades" is a recalibration of the pricing anchors for Bitcoin and gold. During periods of low interest rates and monetary easing, Bitcoin and gold were widely viewed as hedges against fiat currency devaluation, a narrative that attracted substantial capital inflows. But when the macro environment shifts to a high-interest, sticky inflation scenario, the cost of holding non-yielding assets is re-priced, and the hedging narrative's effectiveness diminishes.

The negative correlation between Bitcoin and the 10-year U.S. Treasury real yield, and the positive correlation between gold and the S&P 500, both signal that these assets are reverting to their fundamental risk asset characteristics. This does not negate their medium- to long-term value as allocations but suggests that investors need to reassess their risk and return profiles within a more complex macro framework.

From this perspective, the current capital outflows are essentially a process of narrative and macroeconomic environment realignment. Once inflation expectations stabilize and interest rate paths become clearer, the pricing anchors for Bitcoin and gold will revert to their supply-demand fundamentals— for digital gold, this means that post-halving supply constraints and on-chain activity fundamentals will play a more significant role.

Summary

JPMorgan's latest report clearly reveals multiple dimensions of the retreat of "currency devaluation trades": gold ETFs saw weekly outflows of about $20 billion, Bitcoin ETFs experienced four consecutive weeks of net outflows with increasing scale. The correlation between Bitcoin and the 10-year U.S. Treasury real yield has turned negative, while gold's correlation with the S&P 500 has shifted toward positive, indicating that both assets are behaving more like risk assets rather than safe havens.

The deeper reasons for capital outflows include: rising holding costs in a high-interest-rate environment, systematic adjustments in institutional asset allocation strategies, and macro uncertainties stemming from persistent inflation and tightening expectations. ETF outflows combined with futures market reductions, along with declining market liquidity, have amplified the magnitude of price corrections.

Whether the market can recover in the second half depends on regulatory developments (notably the progress of the Clarity Act) and whether crypto treasury companies can provide clearer dividend expectations. The current market weakness might serve as a contrarian signal, but investors should remain cautious until macro variables become more transparent.

FAQ

Q: What exactly does "currency devaluation trade" refer to?

It refers to the trading strategy where investors buy Bitcoin and gold in response to geopolitical uncertainties, rising inflation, government debt expansion, and the need for dollar diversification. This strategy was especially popular in low-interest-rate environments, as it hedged against the decline in fiat currency purchasing power.

Q: What does the negative correlation between Bitcoin and the 10-year U.S. Treasury real yield imply?

It indicates that when real yields decline, Bitcoin's attractiveness does not necessarily increase—in fact, it breaks the traditional safe-haven asset pricing logic. It shows that Bitcoin is exhibiting more risk asset-like behavior under the current macro environment.

Q: Will ETF fund outflows necessarily cause Bitcoin prices to fall?

Not necessarily. The impact of ETF outflows varies depending on market structure and investor types. However, a sustained and expanding withdrawal over four weeks, combined with simultaneous futures market reductions, generally exerts systemic downward pressure on prices.

Q: What is the Clarity Act mentioned in JPMorgan's report?

Officially called the "CLARITY Act," it aims to clearly delineate the regulatory authority between the SEC and CFTC in the digital asset space, with the CFTC overseeing decentralized digital commodities and the SEC overseeing assets that qualify as securities. The bill was passed by the House in July 2025 and by the Senate Banking Committee in May 2026, but analysts believe its likelihood of passing within this year is below 50%.

Q: How should we interpret "the current market weakness might become a bullish contrarian signal"?

The logic is that when the "currency devaluation trade" is nearing its end, panic selling often results in a concentrated release of selling pressure. If the scale of fund outflows exceeds what fundamentals can justify, it may signal the formation of a structural market bottom.