JPMorgan says gold and Bitcoin rise as debasement trade grows

JPMorgan analysts have emphasised the increasing impact of the "debasement trade" on gold and Bitcoin (CRYPTO:BTC) prices.

Led by global strategist Nikolaos Panigirtzoglou, they noted that both assets are benefiting from factors like geopolitical uncertainty, inflation concerns, and decreasing confidence in fiat currencies.

Gold’s surge beyond traditional explanations, such as bond yield movements, signals deeper structural shifts.

The term "debasement trade" refers to the demand for assets like gold and Bitcoin, driven by fears of long-term inflation, high government deficits, and declining trust in currencies across emerging markets.

According to the analysts, investors are diversifying away from the U.S. dollar, which now makes up just 57% of global currency reserves, as per the International Monetary Fund (IMF).

JPMorgan stressed that the pace of central bank purchases, particularly of gold, will play a key role in determining future price movements.

The analysts also noted that institutional investors, such as hedge funds, are viewing gold and Bitcoin as beneficiaries of the debasement trade, though they do not see Ethereum in the same light.

Retail investors appear to align with this view, as inflows into Bitcoin exchange-traded funds (ETFs) surged after August.

Looking ahead, JPMorgan suggested that a potential Donald Trump victory in 2024 could further support the debasement trade by heightening geopolitical tensions and encouraging expansionary fiscal policies.

At the time of reporting, the Bitcoin price was $61,041.26.