JPMorgan analysts have indicated that a potential victory for Donald Trump in the upcoming U.S. presidential election could drive a surge in retail interest for both bitcoin and gold. According to a report released on Wednesday, led by managing director Nikolaos Panigirtzoglou, there are signs that retail investors are increasingly engaging in what they term the “debasement trade” by purchasing bitcoin and gold exchange-traded funds (ETFs).
The analysts observed a notable uptick in retail participation, not just in bitcoin and gold ETFs, but also in the so-called “meme and AI tokens,” which have outperformed others in market capitalization. They reported a remarkable inflow into bitcoin ETFs, with retail investors contributing $1.3 billion over just two days, which brought October’s total to $4.4 billion—making it the third-highest monthly inflow since January. However, institutional investors remain more cautious, as the analysts noted that “Bitcoin futures have become rather overbought, creating some vulnerability going forward.” This caution is reflected in a slowdown in institutional demand for bitcoin futures, and similarly, while retail investors are actively purchasing gold ETFs, institutional interest in gold futures has noticeably lessened.
The analysts at JPMorgan expressed optimism that a backdrop of macroeconomic uncertainties, inflation worries, and an increase in retail trading could foster growth in cryptocurrencies through 2024. They concluded that if a Trump victory motivates retail investors not only to acquire risk assets but also to further engage in the “debasement trade,” there could be significant upward movement for bitcoin and gold prices in such a scenario.
On the other hand, JPMorgan CEO Jamie Dimon remains skeptical about bitcoin, despite the bank’s broader interest in blockchain technology and digital assets. In a recent interview, Dimon stated that bitcoin “doesn’t have value” and has associated it with illicit activities, advocating for stricter regulations if he were in a governmental position. While JPMorgan supports blockchain initiatives and crypto products like ETFs, Dimon himself continues to be critical of bitcoin as a viable investment.
