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JPMorgan: The Dollar and Bitcoin at Risk… Trading Plan for 2025
Bitcoin, the US dollar, and global bonds may face significant risks in positioning as 2025 approaches, according to JPMorgan analysts in a Friday note.
Using its cross-asset positioning tracker, JPMorgan highlights potential vulnerabilities as markets adjust to shifting liquidity and demand dynamics.
The investment bank views Bitcoin and the dollar as risky positions in 2025. It stated:
“We see elevated positions in equities, modestly long-term positions, near-neutral credit positions, high dollar long positions, low positions in commodities excluding gold, and elevated Bitcoin positions but more modest gold positions.”
From a positioning perspective, the bank believes the most vulnerable asset classes through 2025 are equities, the dollar, and Bitcoin, while less vulnerable categories include non-gold commodities.
Regarding bonds, the global supply-demand balance is expected to deteriorate in 2025, with a $0.9 trillion decline in global bond demand compared to 2024 and a relatively modest $100 billion decrease in net supply.
This imbalance could exert upward pressure on yields, potentially increasing the Global Aggregate Bond Index yield by 40 basis points.
Central banks will play a crucial role in these dynamics. JPMorgan notes that while the Federal Reserve is expected to end its balance sheet reduction in early 2024, it will continue shifting from mortgage-backed securities (MBS) to Treasuries.
JPMorgan warns of significant risks for Bitcoin, the US dollar, and equities by 2025 due to changing market dynamics. Non-gold commodities are seen as less vulnerable. Bond markets could face higher yields due to a supply-demand imbalance, with central banks playing a critical role in market adjustments.
