JPMorgan says 2 weeks of Bitcoin and gold ETF outflows show debasement trade cooling

Simultaneous outflows from Bitcoin and gold ETFs over the past two weeks signal the debasement trade is cooling as Iran-US peace hopes reduce demand for hedges against geopolitical instability, JPMorgan analysts said.

Bitcoin fell 2.7% to $73,293 as simultaneous outflows from Bitcoin and gold exchange-traded funds over the past two weeks indicate the debasement trade is cooling, JPMorgan analysts said in a note dated May 28.

"The simultaneous outflows from both Bitcoin and gold ETFs suggest the debasement trade is cooling, not a rotation from Bitcoin into gold," the analysts wrote. The debasement trade refers to buying Bitcoin and gold as hedges against geopolitical instability, currency weakness and inflation — a strategy that had gained momentum through the first half of 2026 as U.S.-Iran tensions escalated.

Bitcoin slipped below $73,000 in Asian trading hours Thursday, extending a decline that has erased 6.3% over the past seven days, CoinGecko data show. Nearly $1 billion in leveraged crypto positions were liquidated over 24 hours, with long positions accounting for 93% of the wipeout, according to Coinglass. The selloff accelerated after U.S. airstrikes on an Iranian military site near the Strait of Hormuz on Wednesday, though a subsequent Axios report of a draft 60-day memorandum of understanding between U.S. and Iranian negotiators briefly lifted stocks and bonds while leaving crypto under pressure.

The cooling of the debasement trade removes a key demand driver that has supported Bitcoin alongside gold through months of Middle East tensions. If peace hopes materialize further, safe-haven flows into both assets may continue to weaken. However, the shift could also free up capital for risk-on assets, potentially benefiting crypto risk appetite in a different way. Bitcoin was testing support near $72,900 as of 14:30 UTC, with the next major level at $70,000.

ETF Outflows Tell the Story

JPMorgan's analysis points to a structural shift in how investors are positioning. The debasement trade had been a dominant narrative through the first half of 2026 as U.S.-Iran tensions drove demand for hedges against fiat currency debasement and inflation. The Personal Consumption Expenditure Index rose to 3.8% in April, its highest level since 2023, intensifying pressure on the Federal Reserve. Yet even that inflation reading failed to reignite the trade, the analysts noted.

Ether, the second-largest token, fell below $2,000 for the first time since late March, trading at $1,976, down 4.2% over 24 hours. Retail traders rushed to buy the dip, pushing social-media sentiment into fear-of-missing-out territory, Santiment data show — a pattern that has historically preceded further declines. Ether futures open interest climbed to a record 16.39 million ETH even as the price sank, suggesting an influx of new short positions, Coinglass data show.

What Comes Next

The question for Bitcoin holders is whether the outflows represent a temporary repositioning or the start of a deeper rotation. Standard Chartered this week reiterated a $4,000 ether price target by year-end, arguing that on-chain activity will eventually pull token prices higher — a view that assumes the macro backdrop eventually turns favorable. For Bitcoin, the immediate path depends on whether the Iran-US ceasefire talks produce a formal agreement. A deal could further reduce safe-haven demand, while a breakdown in negotiations could revive it just as quickly.

This article is for informational purposes only and does not constitute investment advice.