Bitcoin is steadily capturing market share from gold as investors seek protection against fiat currency debasement, JPMorgan analysts said in a research note this week.
The investment bank described the trend as “the debasement trade rotating from gold to Bitcoin,” citing rising institutional adoption and easier access through spot Bitcoin exchange-traded funds as the primary catalysts behind the shift.
ETF Flows Diverge Sharply
Bitcoin ETFs have now recorded net inflows for three consecutive months through May, while gold ETFs continue to struggle after heavy outflows triggered by the Iran conflict in March, according to data reported by The Block.
During March, Bitcoin ETFs attracted $1.32 billion in inflows, marking the first positive month of 2026. In April, that figure rose to $2.44 billion, the strongest monthly inflow of the year, with BlackRock’s IBIT accounting for nearly 70% of total Bitcoin ETF flows. By early May, another $1.38 billion had already entered Bitcoin funds.
Gold ETFs, meanwhile, saw more than $3 billion in global outflows during March. While Asian demand from China and India helped gold products recover $6.6 billion in April, the broader trajectory still trails Bitcoin’s momentum.
JPMorgan analysts led by managing director Nikolaos Panigirtzoglou noted that Bitcoin’s volatility ratio relative to gold now sits at approximately 1.5, the lowest level on record. The bank suggested this figure could continue narrowing as institutional participation deepens.
Bitcoin Outperforms Gold Amid Geopolitical Tensions
The divergence became most visible during the conflict in Iran earlier this year. Over the two months following the initial escalation, Bitcoin gained nearly 19%, while gold prices declined around 5%, highlighting a growing preference for digital assets among both retail and institutional investors.
“This suggests retail investors are choosing Bitcoin over gold as a debasement trade since the start of the conflict,” the analysts wrote.
Bitcoin buying has not been limited to retail participants through ETFs, the analysts noted. Institutional exposure has also expanded sharply through corporate treasury strategies, with MicroStrategy’s parent company, Strategy, remaining the largest corporate holder of Bitcoin globally.
A Structural Rotation Takes Shape
The JPMorgan report frames the shift as more than a temporary divergence. Gold’s inability to recover from its February-March outflows makes the structural rotation visible, according to the analysts.
The debasement trade, in which investors buy assets like gold or Bitcoin to hedge against weakening fiat currencies, inflation, and geopolitical instability, has historically favored precious metals. However, the growing accessibility of Bitcoin through regulated ETF products appears to be altering that dynamic.
Despite the strong ETF momentum, Bitcoin recently pulled back from a high near $82,739, trading below $79,500 at the time of writing as traders took profits following recent gains. Market participants broadly view the pullback as a healthy correction rather than a bearish reversal.
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