JPMorgan Questions Bitcoin’s ‘Digital Gold’ Status as Gold Demand Surges

JPMorgan analysts are raising doubts about Bitcoin’s role as "digital gold" as demand for traditional gold continues to strengthen.

In a recent report, the bank’s experts highlighted that Bitcoin’s volatility and its close correlation with the equity market are challenging the perception of it being a reliable hedge similar to gold.

Led by Nikolaos Panigirtzoglou, the analysts noted that the ongoing rise in gold prices — now above $3,100 per ounce — reflects an intensifying preference for gold within the “debasement trade.” This investment strategy focuses on assets like gold and Bitcoin as protection against inflation, high debt levels, and weakening fiat currencies. However, Bitcoin has struggled to keep pace this year, lagging behind due to its historically higher volatility and a strong performance at the end of 2024.

Moreover, data shows that spot Bitcoin ETFs have experienced outflows over the past two months, while gold ETFs have seen continued inflows. This pattern suggests that private investors are increasingly favoring gold, particularly during February and March. Additionally, Bitcoin futures have turned negative since mid-January, whereas gold futures have remained steady. Analysts believe that the recent surge in gold buying is driven primarily by private investors and central banks rather than speculative traders.

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Central banks and private investors are significantly boosting their gold holdings, pushing global allocations to a record level. Analysts estimate that around $9 trillion, or 3.5% of global financial assets, are now held in gold, with central banks accounting for $4 trillion and private investors holding $5 trillion.

In contrast, Bitcoin’s current price of approximately $83,700 still sits comfortably above its estimated production cost of $62,000, which has historically acted as a support level. JPMorgan’s analysts also calculated Bitcoin’s volatility-adjusted value at around $71,000, taking into account its higher risk when compared to privately held gold, valued at about $5 trillion.

When asked about whether the $62,000 and $71,000 levels could be considered support zones for Bitcoin, Panigirtzoglou acknowledged that historically, the production cost of $62,000 has often acted as a price floor. As the debate around Bitcoin’s position as a safe-haven asset continues, the focus appears to be shifting back to traditional gold amid ongoing economic uncertainty.

Alexander Stefanov