As global investors gradually lose confidence in fiat currencies, the 'Debasement Trade' — which involves shifting funds to gold and bitcoin to combat inflation and currency devaluation risks — has once again become the main theme in the market. This influx of funds has boosted the prices of gold and cryptocurrencies at the end of last year, but entering 2025, it has turned into a zero-sum game of 'you rise, I fall.' JPMorgan stated that the performance of the two has shown a divergence, with gold momentum weakening, whereas bitcoin has greater upside potential in the second half of the year.
JPMorgan's strategy analysis team led by Nikolaos Panigirtzoglou released a report on Wednesday stating:
From mid-February to mid-April, gold's price increase surpassed that of bitcoin; however, in the past three weeks, we have observed the opposite situation — bitcoin has strengthened while gold has clearly retreated.
JPMorgan's analysis team further estimates that this 'tug-of-war between gold and bitcoin' will continue until the end of this year, but with a series of bullish factors in play, bitcoin's upside potential is greater than that of gold.
Gold is bleeding, while bitcoin is attracting capital.
Since peaking on April 22, gold prices have retraced nearly 8%, while bitcoin has risen about 18% during the same period. In addition to the divergence in price performance, there has also been a noticeable diversion in capital momentum.
According to analysts, in the past three weeks, a large amount of capital has withdrawn from gold ETFs and flowed into spot bitcoin and other cryptocurrency funds. A similar trend has also appeared in the futures market: gold positions have declined, while bitcoin futures have clearly rebounded.
JPMorgan pointed out that the situation at the beginning of the year was exactly the opposite, when capital embraced gold and sold off bitcoin and other risk assets; now the wind has completely turned.
Bitcoin's strength is not coincidental; a series of catalysts have emerged.
Analysts say that bitcoin's recent strong performance is not simply because gold is weakening, but because of internal bullish catalysts within the crypto space.
Firstly, corporate buying is in full swing. Strategy (formerly MicroStrategy) and the Japanese listed company Metaplanet continue to buy bitcoin in large quantities. Strategy plans to raise an additional $42 billion for bitcoin investment before 2027, having currently achieved about 60% of its goal.
U.S. state governments are also getting involved.
In addition to institutional buying, local governments in the United States are also beginning to include bitcoin in their asset allocation, symbolizing bitcoin's gradual move towards 'national reserve asset' status.
New Hampshire has passed a bill allowing the state government to allocate up to 5% of its assets to bitcoin and gold; Arizona has announced the establishment of a 'Digital Asset Reserve Fund,' using staking rewards and airdrops as funding sources, while promising not to increase the tax burden.
The JPMorgan report mentions that if more U.S. state governments continue to incorporate bitcoin into their strategic reserves, this will become a long-term bullish factor, providing stronger support for bitcoin prices.
The institutionalization of the derivatives market is accelerating, lowering the participation threshold for institutions.
The report also points out that in addition to capital-driven factors, the maturity of the cryptocurrency market infrastructure is also an important boost for bitcoin.
Recently, major U.S. cryptocurrency exchanges have accelerated mergers and acquisitions of derivatives platforms, with Coinbase acquiring the well-known options exchange Deribit; Kraken acquiring NinjaTrader, and Gemini obtaining a cross-border derivatives trading license in Europe, symbolizing that the cryptocurrency derivatives market is gradually becoming institutionalized, which is expected to further attract institutional capital.
JPMorgan: Bitcoin's performance looks promising in the second half of the year.
Considering the above factors, JPMorgan believes that as gold momentum weakens and bitcoin's fundamentals and policy aspects activate a dual engine, coupled with the maturation of market infrastructure, bitcoin still has more upside potential in the second half of the year.
As of the time of writing, bitcoin is quoted at approximately $103,898, having risen 1% in the past 24 hours.
"Who will benefit the most in the second half of the year? JPMorgan predicts: Bitcoin will outperform gold." This article was first published on (Blockcast).
