For months, the trade was simple: buy scarce assets, hedge against a world where governments print money and geopolitical chaos reigns. Now, according to JPMorgan strategist Nikolaos Panigirtzoglou, that playbook is getting shelved.
In a research note dated May 28, Panigirtzoglou flagged a significant retreat from what’s known as the “debasement trade,” pointing to simultaneous outflows from both bitcoin and gold ETFs as evidence that investors are stepping away from the assets they’d been hoarding as shields against inflation, ballooning government debt, and fiat currency erosion.
What the debasement trade actually is, and why it’s unwinding
The debasement trade, in plain terms, is a bet that your government’s money is going to be worth less tomorrow than it is today. When investors worry about runaway spending, currency weakness, or geopolitical instability, they pile into assets with hard caps on supply. Gold is the centuries-old version. Bitcoin is the newer, more volatile cousin.
Both had been beneficiaries of exactly that fear throughout early 2026. Bitcoin ETFs recorded inflows for three consecutive months heading into May, a streak that signaled growing institutional conviction in crypto as a macro hedge. Gold ETFs, meanwhile, were still clawing back from losses tied to the Iran conflict fallout earlier in the year.
Then the mood shifted. The catalyst, according to Panigirtzoglou’s analysis, appears to be expectations of easing tensions between Iran and the US. The same geopolitical anxiety that had fueled demand for scarce assets started to dissipate, and with it, the urgency to hold them.
The numbers tell the story. Bitcoin ETFs saw outflows exceeding $1 billion during some weekly periods in May, with one particularly sharp Thursday session logging $145.64 million in redemptions alone. Gold ETFs followed a similar trajectory, bleeding capital in parallel.
That parallel movement is the key detail here. When both decline together, it suggests something more fundamental: a broad pullback from the entire hedging thesis, not just a reshuffling within it.
From inflows to exits: how fast sentiment flipped
The speed of this reversal is worth appreciating. Just weeks before these outflows accelerated, the narrative around bitcoin ETFs was almost triumphant. Three straight months of inflows had bolstered the case that spot bitcoin ETFs were becoming a permanent fixture in institutional portfolios, not just a speculative vehicle for retail traders chasing momentum.
Gold, for its part, had been struggling to regain footing after the March disruptions tied to the Iran conflict. The precious metal’s ETF recovery was already lagging bitcoin’s, which made gold particularly vulnerable when the broader debasement thesis lost steam.
What this means for investors watching bitcoin and gold
Weekly outflows north of $1 billion from bitcoin ETFs alone suggest this isn’t just noise. The competitive dynamic between bitcoin and gold is also worth monitoring. Bitcoin ETFs had been winning the inflow race for months before this reversal, suggesting that institutional allocators were increasingly treating crypto as a legitimate alternative to precious metals in the debasement trade.
Panigirtzoglou’s analysis captures a genuine inflection point. The market is telling us, through the blunt instrument of ETF flows, that the fear trade is losing its grip.