Gold and Bitcoin Emerge as Key Hedges in Long-Term Depreciation Strategy

JPMorgan analysts have identified a lasting shift in investor behavior, highlighting the growing reliance on gold and Bitcoin as hedges against the declining value of fiat currencies.

This trend, referred to as the “depreciation trade,” has transitioned from a temporary reaction to a structural investment strategy.

In a report led by Nikolaos Panigirtzoglou, the analysts observed that gold’s recent price increases far exceed expectations based on typical market drivers like bond yields or the strength of the dollar. This indicates a renewed demand for assets that can act as a buffer against economic instability. Bitcoin, too, has gained prominence, with record-breaking inflows into the crypto market in 2024 underscoring its role as an increasingly essential asset for investors.

The appeal of these assets lies in their ability to preserve value in uncertain times. Inflation, rising government debt, and geopolitical tensions have driven both institutional and individual investors to seek alternatives that safeguard wealth. Gold remains a preferred choice, evidenced by growing central bank reserves and the rising popularity of gold ETFs, while Bitcoin’s rapid adoption signals its expanding influence in global finance.

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JPMorgan remains optimistic about the future of both gold and Bitcoin, predicting strong performance through 2025. The analysts point to increasing institutional interest and the ongoing challenges faced by fiat currencies as key drivers of this upward trend. As traditional money systems face mounting pressures, gold and Bitcoin are positioned to become even more integral to wealth preservation strategies in the years ahead.

Alexander Stefanov