US Elections and Geopolitical Strains Favor Bitcoin, JPMorgan Predicts ‘Debasement Trade

• JPMorgan predicts that U.S. elections and geopolitical tensions will drive increased demand for Bitcoin, supporting the “debasement trade.”
• Institutional investors are turning to Bitcoin as a hedge against economic risks, with potential growth if Trump wins the election.

As geopolitical tensions rise and the U.S. presidential election approaches, investors are turning to gold and Bitcoin as part of a “debasement trade,” according to an Oct. 3 report by JPMorgan. The report highlights that both assets are gaining favor as investors brace for potential financial instability and a “catastrophic scenario.”

In addition to the crumbling of U.S. dollar dominance, a CNF post previously highlighted Bitcoin’s potential to replace the USD. The debasement trade refers to an increased demand for gold, driven by concerns ranging from heightened geopolitical uncertainty since 2022 to fears about inflation and high government deficits across most economic sectors.

JPMorgan shared that:

“Rising geopolitical tensions and the coming United States election are likely to reinforce the ‘debasement trade,’ thus favoring both gold and Bitcoin.”

Institutional and Retail Investors Shift Focus

It is also worth noting that U.S. dollar dominance is under threat as BRICS nations discuss creating an independent payment system and de-dollarization as CNF reported. The report points to a spike in open interest for Bitcoin futures on the Chicago Mercantile Exchange (CME), suggesting that institutional investors, including hedge funds, may view Bitcoin and gold as similar hedges against economic risks.

The number of contracts for CME Bitcoin futures rose from 10,000 at the start of 2024 to over 40,000 by October 1. Additionally, Bitcoin exchange-traded funds (ETFs) have seen renewed interest, with inflows resuming in September after a decline in August. Cryptocurrency ETFs attracted more than $20 billion in 2024, according to data from Morningstar.

JPMorgan notes that this trend could intensify, especially if Donald Trump wins the upcoming U.S. election. A Trump victory would likely boost Bitcoin’s prospects due to his regulatory stance and support for an expansionary fiscal policy, which could fuel the debasement trade even further.

Trump has previously expressed intentions to overhaul the U.S. regulatory framework, pledging to dismiss SEC Chairman Gary Gensler and position the U.S. as a global hub for cryptocurrency innovation.

According to CoinMarketCap data, at the time of writing this update, the market shows that BTC is valued at $60,991.40, decreased by 0.14% in the past day, with a decrease of 6.09% in the past week. See BTC price chart below.