As a seasoned researcher with a knack for deciphering market trends and a soft spot for cryptocurrencies, I find myself intrigued by the recent analysis from JPMorgan Chase. The idea of retail investors embracing the “debasement trade” by investing in Bitcoin and gold ETFs is fascinating, especially considering the potential impact of a Trump presidency on these assets.
As a researcher studying financial markets, I’ve been considering the potential implications of a Donald Trump victory in the U.S. Presidential elections. In such a scenario, some analysts at JPMorgan Chase anticipate that both Bitcoin and gold might experience further growth due to the surge of retail investors adopting what they term as the “debasement trade.” This strategy is essentially a bet against the stability of the U.S. dollar, given concerns over potential monetary policies that could lead to currency devaluation under President Trump’s administration.
According to a recent analysis from JPMorgan, it seems that private investors are becoming increasingly interested in the idea of investing in assets like Bitcoin and Gold through Exchange-Traded Funds (ETFs), as they appear to be adopting a strategy tied to the devaluation of currency.
According to a report by The Block, there’s been a substantial increase in investments into Bitcoin exchange-traded funds (ETFs) recently, accumulating a total of $4.4 billion this October. This makes it the third-highest monthly inflow for these Bitcoin ETFs on record.
Analysts point out that these inflows are driven by retail enthusiasm for non-traditional investments and a defensive strategy against currency devaluation. On the other hand, institutional investors have temporarily halted their Bitcoin futures transactions over the past few weeks, as indicated by their Bitcoin futures position proxy which is derived from changes in cumulative open interest on the institutional exchange CME.
To clarify, it’s been found in a Binance Research report that individual investors make up around 80% of the activity in Bitcoin ETF markets. Interestingly, there has also been a 30% increase in institutional interest since the start of the year, as indicated by the same report.
According to a report by CryptoGlobe, inflows into spot Bitcoin Exchange-Traded Funds (ETFs) have accumulated over $23 billion this year, with the BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC) being the main contributors to this growth.
Some experts link Bitcoin’s recent surge in value with the rising chances of U.S. Presidential candidate Donald Trump in the polls. During this electoral period, Trump has shown support for cryptocurrencies, even stating that nothing resembles Bitcoin as he knows it.
According to JPMorgan’s report, there has been an increase in investments into Gold Exchange-Traded Funds (ETFs), which is probably due to individual or retail investors. At the same time, large institutions have stopped participating in the gold futures market. This can be rephrased as: The report from JPMorgan reveals that more money is flowing into Gold ETFs, a trend likely fueled by individual investors. Conversely, institutional investors seem to have withdrawn their participation from the gold futures market.
In essence, if a Trump victory encourages individual investors to invest more aggressively in high-risk assets and to favor investments that benefit from currency devaluation (known as the ‘debasement trade’), this trend could potentially boost the value of both bitcoin and gold. Consequently, there might be an increase in the prices of these assets if Trump wins the election.
In an interesting development, gold demand hit an all-time high of over $100 billion for the first time ever during the third quarter, as reported by the World Gold Council (WGC). This spike in demand can be attributed to heightened geopolitical uncertainties and investors seeking secure investments, pushing the value of gold to unprecedented levels.
Gold demand increased by 5% compared to the previous year, reaching a total of 1,313 metric tons. This growth was accompanied by a significant rise in value, amounting to approximately 35%. The recent gold rush has been quite intense, causing gold investment funds to receive an inflow of around $3 billion within the last week.
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2024-10-31 21:11