The “debasement trade” trend will persist over the long term as allocations to gold and bitcoin in investor portfolios expand, JPMorgan analysts said, according to The Block.
“The rise in gold prices over the past year has gone well beyond the moves implied by changes in the US dollar and bond yields. This likely reflects the re-emergence of [a risk-hedging strategy],” the experts noted.
Record inflows into the crypto market in 2024 also indicated that bitcoin has become a structurally significant instrument for market participants.
JPMorgan described the past year as a “turning point” for the digital-asset industry. By its estimates, cumulative inflows into the space over 12 months were about $78bn.
Of that, $27bn went to ETFs, $14bn to CME futures, $14bn to crypto venture funds, $22bn were represented by MicroStrategy’s bitcoin purchases, and $1bn by miners’ transactions.
According to the analysts, the increase in gold’s share in portfolios is “obvious” when examining the amount of the precious metal held by central banks and private investors.
The latter group uses various instruments: physical gold, gold ETFs and other investment products, which currently account for a significant percentage of the total among non-bank investors worldwide.
In November 2024, JPMorgan analysts expressed confidence “in good performance” of the first cryptocurrency and gold during Donald Trump’s presidency in the US.