Bitcoin demand rises with $55B futures growth

Bitcoin (CRYPTO:BTC) and gold are becoming increasingly significant in investment portfolios as investors hedge against inflation and geopolitical instability, according to a January 3 research note from JPMorgan.

The analysis suggests that the “debasement trade,” driven by concerns over debt debasement and persistent fiscal deficits, is a trend that will continue.

JPMorgan's report highlights a shift in investor behavior, pointing to a record $55 billion in open interest for Bitcoin futures by December 2024, up from $18 billion in January.

This data, sourced from CoinGlass, reflects growing institutional participation and the perception of Bitcoin as comparable to gold for risk management.

“Gold and BTC appear to have become more important components of investors’ portfolios structurally,” the note added.

The increasing inflow into Bitcoin ETFs further supports this view.

According to Bloomberg Intelligence, U.S. Bitcoin ETFs surpassed $100 billion in net assets in November 2024, marking a significant milestone.

JPMorgan noted that retail investors showed renewed interest in September, as ETF inflows resumed after a brief outflow the previous month.

Prominent investors, including Paul Tudor Jones, and U.S. state governments have also turned to Bitcoin as a hedge against fiscal and inflationary uncertainties.

These developments align with JPMorgan’s observation that geopolitical risks since 2022 have contributed to the rising demand for Bitcoin and gold.

Citi's December report emphasizes the importance of crypto ETF inflows as an indicator of new market entrants.

Similarly, asset manager Sygnum Bank forecasts that institutional demand will create “demand shocks,” potentially driving Bitcoin prices higher by 2025.

At the time of reporting, the Bitcoin (BTC) price was $101,801.