JPMorgan: Unwinding Hedges Could Give Bitcoin More Price Support Than Gold

A recent analysis from JPMorgan suggests that if investors unwind their defensive hedges on spot Bitcoin, the resulting price support could be more significant than a similar move in gold. This hypothesis is based on a structural analysis of investor positioning in exchange-traded funds (ETFs) for both assets, rather than a prediction that Bitcoin will replace gold in portfolios.

According to a report from analysts led by Nikolaos Panigirtzoglou, cited by *The Block*, the key premise is that Bitcoin ETF investors are currently more heavily hedged than their counterparts in gold ETFs. Should market sentiment improve, the removal of these protective positions—such as closing short sales or selling put options—could create substantial buying pressure.

Contrasting Fund Flows

The analysis comes amid a renewed "devaluation trade," where investors seek scarce assets over concerns about inflation and rising public debt. Following the U.S. Federal Reserve's late July meeting, both Bitcoin and gold ETFs saw net inflows, reflecting a broader trend in August.

However, more granular weekly data from SoSoValue reveals significant volatility. While the two ETF categories saw a combined net inflow of $4.23 billion from July 31 to September 4, several weeks experienced substantial outflows:

• Post-Fed meeting week: $61.53 million net outflow
• Week of Aug. 14: $389.71 million net outflow
• Week of Sept. 11: $462.73 million net outflow
• Week of Sept. 16: $586.27 million net outflow

These figures highlight fluctuating short-term sentiment, even as Bitcoin is increasingly considered alongside gold in devaluation-focused strategies.

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Hedging Differences in IBIT vs. GLD

JPMorgan's analysis is supported by a March comparison of BlackRock's iShares Bitcoin Trust (IBIT) and the SPDR Gold Shares (GLD), the largest gold ETF. The bank found that IBIT had both rising short interest and a higher put-to-call open interest ratio compared to GLD, whose short interest was declining. This indicates a greater use of risk-mitigation tactics among Bitcoin ETF holders.

When an investor closes a short position, they must buy back the shares, providing direct support to the ETF's price. The impact of unwinding put options is more indirect. The larger scale of these defensive positions in Bitcoin ETFs implies a more forceful market reaction if investors collectively decide to de-hedge.

Macro Factors Remain Key

JPMorgan cautions that ETF positioning is only one piece of the puzzle, and broader macroeconomic conditions like rising Treasury yields or a strengthening U.S. dollar remain critical. Bitcoin's reaction to monetary tightening has been inconsistent, at times acting as a scarcity hedge and at others behaving like a high-risk asset sensitive to liquidity.

The ultimate validation of this thesis requires more than a temporary price rally. It would need to be accompanied by sustained demand for Bitcoin ETFs combined with clear evidence that investors are reducing their defensive positions. Distinguishing between new capital inflows and existing holders removing hedges will be crucial, as the latter signals a much stronger degree of investor conviction.