The JPMorgan analysts think that the victory of Donald Trump in the US Presidential Election might trigger a retail demand for Bitcoin and gold, pushing them up. It seems that an increasing number of these retail investors would be interested in these assets while the institutional investors seem to have no love lost for market dynamics.
Bitcoin and Gold in Increasing Demand
JPMorgan’s managing director, Nikolaos Panigirtzoglou, said his team reported the consequences a possible Trump victory may have for assets traditionally treated as hedges against inflation and currency debasement, such as Bitcoin and gold. According to analysts, the so-called “debasement trade” is gaining steam among retail investors, where buyers seek investments in assets expected to retain value as fiat currencies lose purchasing power. As part of the approach, some are big-time buyers of Bitcoin and gold ETFs.
The report further notes that alone, the retail investors contributed to Bitcoin ETFs the sum of $1.3 billion within just two days, hence inflowing October at $4.4 billion, the third-highest inflow month since January. Other than the mainstream assets, retail investors claim to have been very active in “meme and AI tokens,” which realized market cap increases that would outstrip the expectations of most investors.
Institutional Investors Remain Cautious
Retail is still driving the demand, and institutional investors are more restrained. According to the analysts at JPMorgan, Bitcoin futures have been “overbought” and that has been more of an area of institutional interest. The near-term vulnerability could be increased in this case since overbought assets tend to make corrections more likely. It appears that the institutional investor does not want to enter at these levels because it is concerned with how long prices can keep going, given the quick inflow of the retail investor.
In like manner, while retail investors seem bullish on the gold ETF, institutional interest in gold futures has stalled. The divergence between retail bullishness and institutional caution could thus suggest that there may be contrasting views on the stability these assets will offer in periods of economic uncertainty.
Jamie Dimon’s Bitcoin Warning
Despite the seeming adoption of blockchain-based ventures and even cryptocurrency-linked financial products through JPMorgan, bitcoin itself remains an outright critic by the bank’s CEO, Jamie Dimon. Dimon has long been scathing of Bitcoin, going as far as to pronounce it worthless and associating it with nefarious practices. In a recent interview, Dimon restated his position, saying that he could not see much value in Bitcoin and, if he were in some government position, would actually want more stringent regulation.
Although JPMorgan continues to be actively working with blockchain technology and already offers crypto-related products in the form of ETFs, Dimon’s harsh words reflect one of the biggest opinion chasms between the two groups within the institution. Though the bank continues to control new opportunities with digital assets tightly because of their growing popularity, Dimon himself remains unconvinced by the long-term investment opportunities presented by Bitcoin.
Looking forward, JPMorgan’s analysts believe that economic uncertainty and fingering inflationary concerns, along with retail trading momentum, will provide support to cryptocurrency markets well into 2024. More momentum will come with a Trump win, bringing more retail investors into Bitcoin and gold as hedges against economic instability. Institutional investors caution, however, which signals volatility in the cryptocurrency and gold markets.
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