Investing.com -- JPMorgan strategists said in a note Thursday that Bitcoin and gold could see significant gains if former President Donald Trump wins the upcoming U.S. election, as retail investors increasingly adopt the “debasement trade” by investing in these assets.
The strategy, which focuses on protecting against potential currency devaluation, appears to be gaining traction among retail investors ahead of the election.
“Retail investors appear to be embracing the ‘debasement trade’ in an even stronger manner by buying bitcoin and gold ETFs," the investment bank wrote.
JPMorgan explained that spot Bitcoin ETFs have experienced robust inflows, with over $1.3 billion moving into these funds in just the past two days.
October alone is said to have seen inflows of $4.4 billion, making it the third-largest month for net inflows into spot Bitcoin ETFs since their launch in January.
The bank adds that the increased interest extends to meme and AI-based tokens, whose market capitalizations have recently outperformed.
In the gold market, JPMorgan says the trend is similar, with retail-driven inflows into gold ETFs continuing, though institutional investors seem more cautious, holding back on new futures positions.
According to JPMorgan, “there could be additional upside for bitcoin and gold prices in a Trump win scenario,” as this outcome might inspire further retail investment in assets perceived as a hedge against currency devaluation.
The note also highlights the broader market's current stance, indicating that credit markets are more inclined to price in a Trump win, unlike equities, rates, or FX markets.
Still, if Trump wins, JPMorgan sees potential for short-covering and position unwinding across various assets, which could enhance liquidity and drive financial asset prices higher.