JPMorgan's report indicates that due to the prevalence of debasement trades, gold and Bit have gained structural importance in investors' portfolios. Bit reached $78 billion in capital inflows in 2024, and with Trump's policies after his election victory, Bit and gold as safe-haven assets will both benefit, and this "Trump trade" effect is expected to continue into 2025.
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ToggleDebasement trades continue to thrive
JPMorgan proposed the "debasement trade" last October, and analysts say this debasement trade is driven by multiple factors, including increased geopolitical uncertainty since 2022, persistent inflation concerns, massive government deficits in major economies, and weakening confidence in fiat currencies, especially in some emerging markets.
Due to the prevalence of debasement trades, gold and Bit have gained structural importance in investors' portfolios.
The 26% rise in gold prices over the past year has far exceeded the trend implied by changes in the US dollar and real bond yields, and may reflect the resurgence of this debasement trade. The record capital inflows into the crypto market in 2024 also indicate that Bit is becoming a "more important component" in investors' portfolios.
Gold's share of non-bank investors' assets has risen
According to The Block, the structural rise of gold in investors' portfolios is evident. This includes physical gold, gold ETFs, and other investment vehicles, which now account for a significant portion of the total assets held by global non-bank investors.
Bit reached $78 billion in capital inflows in 2024
Bit is also becoming an increasingly important part of investors' portfolios. JPMorgan analysts said 2024 was a pivotal year for the crypto market, with an estimated $78 billion in capital inflows, including:
- $27 billion net inflows into crypto funds (adjusted down $17 billion to reflect the shift from centralized exchanges to more cost-effective and liquid spot Bit ETFs)
- $14 billion invested in CME futures
- $14 billion in venture capital funds raised through crypto
- $22 billion in Bit purchases by MicroStrategy and $1 billion by Bit miners
MicroStrategy's Bit purchases alone accounted for 28% of the total crypto market capital inflows in 2024.
(Understanding MicroStrategy from Scratch: From BI to the Bit Empire)
Analysts also believe that as gold and Bit gain structural importance, the debasement trade will continue. JPMorgan had previously issued a report stating that Trump's election victory would drive a Bit surge, and with the upcoming policies, Bit and gold as safe-haven assets will both benefit, and this "Trump trade" effect is expected to continue into 2025.
Risk Warning
Crypto asset investments are highly risky, and their prices may fluctuate dramatically, potentially resulting in a total loss of principal. Please carefully evaluate the risks.
