According to a recent note sent to clients by U.S. banking giant JPMorgan, the correlation between Bitcoin and gold has sharply weakened due to escalating geopolitical risks surrounding Iran. Historically, these two assets have tended to move in tandem as safe havens during global crises. However, the latest data show that their pricing paths have increasingly diverged in recent weeks.
ETF Flows Signal Shifting Market Preferences
JPMorgan analysts highlighted a clear split in fund flows for gold and Bitcoin exchange-traded funds (ETFs) since February 27. The world’s largest gold ETF, SPDR Gold Shares, saw outflows equal to roughly 2.7% of its portfolio over this stretch. In contrast, BlackRock’s iShares Bitcoin Trust recorded a net inflow equal to 1.5% of its portfolio value during the same period.
Nikolaos Panigirtzoglou, a managing director at JPMorgan, pointed out that while gold-backed ETFs led the way in early 2024, Bitcoin ETFs gained the upper hand starting in March. He noted that during heightened Middle East tensions, investors increasingly viewed Bitcoin ETFs as a “safe harbor,” steering capital toward the cryptocurrency at the expense of gold.
The surge of institutional capital into spot Bitcoin ETFs has outpaced flows into traditional precious metal funds, signaling a significant shift in risk appetite and reflecting the broader mood in financial markets.
JPMorgan’s investor note commented, “During this period, we have witnessed a significant rotation of capital from gold to Bitcoin. The interest in Bitcoin ETFs highlights how the narrative of ‘digital gold’ is gaining traction in times of crisis.”
Institutional Players and Shifting Hedging Strategies
JPMorgan observed that most fresh ETF demand stems from retail investors and portfolio advisors, while institutional derivatives markets remain comparatively cautious. This has resulted in a disconnect: hedge funds are reducing direct Bitcoin positions even as demand for Bitcoin ETFs accelerates.
During this period, short positions in the iShares Bitcoin Trust have risen, while shorts in SPDR Gold Shares have declined. This trend suggests that hedge funds are seeking protection in the Bitcoin marketplace, whereas they are treating gold holdings more as a defensive anchor.
Both retail and professional investors are increasingly viewing Bitcoin as a store of value, but certain institutional players remain wary of the recent rally. Demand for downside hedges in Bitcoin derivatives is rising, even as steady inflows into spot ETF products persist.
Technical Levels and Market Dynamics for Bitcoin
Despite fluctuations in derivatives and mounting geopolitical threats, Bitcoin has managed to stay above the $70,000 level. Sources note that ETF inflows have remained strong since the start of 2024, with the largest Bitcoin ETF nearly doubling the net increase seen by gold ETFs over the same period.
Analysts suggest that if the momentum continues, ETF investors may soon set their sights on the $80,000 resistance level for Bitcoin. On the downside, should macroeconomic risks or volatility spike, the $64,000 mark is widely considered a critical technical threshold for further selloffs.
Market experts emphasize that shifts in Federal Reserve interest rate policy and fluctuations in energy prices will serve as crucial tests for both gold’s and Bitcoin’s roles as safe haven assets in the months ahead.
