The upcoming US presidential election is stirring excitement across the cryptocurrency market. Analysts at JPMorgan suggest that a victory for Donald Trump could spark new momentum for Bitcoin and gold, driven by increasing interest from retail investors seeking assets that can withstand economic instability.
Retail investors turn to 'devaluation trading.'
JPMorgan's lead analyst, Nikolaos Panigirtzoglou, highlights a trend he calls 'devaluation trading,' where investors turn to assets like Bitcoin and gold to hedge against currency devaluation. With Trump's prospects improving, investors increasingly view these assets as effective hedges against the risks associated with traditional currencies.
According to JPMorgan, 'Retail investors are showing stronger acceptance of 'devaluation trading' by buying Bitcoin and gold ETFs.' Investors not only want to protect their assets but are also showing increasing interest in alternative investments such as meme coins and AI tokens that have outperformed in market value.
Inflow into Bitcoin ETFs reaches record levels.
In October, Bitcoin ETFs saw a notable influx of new money amounting to $1.3 billion in just two days, pushing the total monthly inflow to $4.4 billion. This marks the third-highest month for ETF inflows since its launch in January, indicating a significant increase in retail investor interest. More and more retail investors are embracing Bitcoin as a hedge against economic instability and the potential weakening of the US dollar.
Institutional investors remain cautious.
While retail demand is surging, institutional interest in Bitcoin has cooled. JPMorgan analysts note that institutional investors are withdrawing from Bitcoin futures, citing concerns about an 'overbought' market. The report states, 'Bitcoin futures have become significantly overbought, creating potential vulnerabilities in the future.' Similarly, while retail investors continue to pour money into gold ETFs, institutional investments in gold futures have stalled, highlighting the different strategies between retail and institutional investors.
Will Trump's victory boost demand for Bitcoin and gold?
JPMorgan analysts emphasize that investors are increasingly focused on protecting their assets from economic shifts and inflation. They predict that a Trump victory will boost retail demand for Bitcoin and gold. The report states, 'Trump's victory could inspire retail investors to not only buy risk assets but also embrace 'devaluation trading,' potentially driving further gains for Bitcoin and gold prices.'
This outlook aligns with JPMorgan's optimistic view of the cryptocurrency market, which the bank expects to grow significantly by 2025. Analysts believe this potential growth is due to the ongoing appeal of 'devaluation trading' and political changes that could influence US investment preferences.
As previously noted, the market is closely watching the US election, with more retail investors turning to Bitcoin and gold as shields against economic instability. Whether Trump's victory will propel this trend remains uncertain, but it certainly presents an exciting possibility for market participants.
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