U.S. spot Bitcoin ETFs are facing a significant institutional cooling, with an 18-day outflow streak and a recent single-day net outflow of $213.85M, led by BlackRock's IBIT. JPMorgan analysts attribute this to an accelerated retreat from the "debasement trade," as investors pivot to AI stocks and avoid crypto due to high interest rates and regulatory uncertainty. Gold ETFs are also seeing outflows, with both assets behaving more like risk assets.
Bitcoin ETF outflows
- ▪The U.S. spot Bitcoin ETF market recorded a total net outflow of $213.85 million in a single day
- ▪U.S. spot Bitcoin ETFs have experienced an 18-day streak of outflows
- ▪Grayscale’s GBTC fund recorded a single-day outflow of $87.91 million
- ▪BlackRock’s iShares Bitcoin Trust (IBIT) led the market exodus with a single-day net outflow of $148.5 million
Gold ETF outflows
- ▪The outflows from gold ETFs in the week ending June 5 followed a week of modest inflows
- ▪Gold exchange-traded funds saw approximately $20 billion of outflows in the week ending June 5
Debasement trade retreat
- ▪The "debasement trade" is investor demand for Bitcoin and gold driven by concerns over inflation, government debt, and weakening fiat currencies
- ▪Analysts suggest institutional money is pivoting from speculative digital assets to AI-linked equities
- ▪Concerns about persistently high interest rates are causing some institutional investors to rotate out of crypto ETFs to manage risk
- ▪JPMorgan analysts report a broad retreat from the "debasement trade" by retail and institutional investors, which has accelerated for Bitcoin
Institutional futures positioning
- ▪Positioning in gold futures has steadily declined since late February, while Bitcoin futures positioning began reversing in early May
- ▪Institutional investors have been reducing their exposure to both Bitcoin and gold through futures markets
Correlation with risk assets
- ▪Bitcoin's correlation with 10-year U.S. real Treasury yields recently turned negative, suggesting the opportunity cost of holding non-yielding assets is a factor
- ▪Both Bitcoin and gold have recently behaved more like risk assets than portfolio diversifiers
JPMorgan crypto outlook
- ▪JPMorgan assigns less than a 50% probability to the passage of U.S. crypto market structure legislation
- ▪Allocations to Bitcoin and gold by non-bank investors have fallen to levels last seen in March 2025
- ▪JPMorgan analysts, led by Nikolaos Panigirtzoglou, suggested that current weak market sentiment could be a "bullish contrarian signal going forward."
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