JPMorgan: Iran conflict has broken the Bitcoin–gold correlation; since Feb 27 the largest gold ETF (GLD) saw ~2.7% of AUM in outflows while BlackRock’s iShares Bitcoin Trust (IBIT) absorbed ~1.5% of AUM in inflows; IBIT inflows in 2024 are roughly 2x GLD’s accumulation. Data shows a capital rotation toward spot Bitcoin ETFs (crypto, ETFs, institutional adoption) despite higher volatility; spot ETF demand is driving ETF market dominance. JPMorgan flags a market-structure risk: institutional derivatives diverge — hedge funds are trimming direct BTC exposure, short interest in IBIT has surged while GLD short interest slipped, creating potential volatility in crypto price dynamics.

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BlackRock’s iShares Bitcoin Trust (IBIT) absorbed inflows totalling around 1.5% of its assets in the same window.
JPMorgan also highlights that while spot Bitcoin ETFs are witnessing inflows, institutional derivatives markets give an alarming alarm.

The link between Bitcoin (BTC) and gold has broken majorly due to the Iran conflict, as per the note to investors by JPMorgan. As geopolitical instability normally influences a unified bid for safe havens, the two assets are now shifting in opposite directions.

This separation indicates a prominent shift in how capital is treating “digital gold” as contrasted with the real thing. Rather than moving in together as crisis surrounds, investors are aggressively moving capital, making a clear winner in the ETF market since late February.

Since the tensions surged on February 27, report a stark divergence in capital flows. The biggest gold ETF has bled outflows, estimated to be around 2.7% of its assets under management.

Contrasting The Data

Contrasting this, BlackRock’s iShares Bitcoin Trust (IBIT) absorbed inflows totalling around 1.5% of its assets in the same window. The analysts of JPMorgan, directed by Managing Director Nikolaos Panigirtziglou, underscored in their latest note to investors that this reverses the trend witnessed earlier in the year when gold funds held the advantage.

The data is obvious. While gold has historically been the default safety trade at the time of Middle East tensions, capital is now voting for Bitcoin exposure. Institutional placing normally indicates a shift away from bullion in favour of the spot Bitcoin ETFs, regardless of the greater volatility inherent in crypto assets.

It is interesting to note that IBIT inflows since the inception of 2024 are now around double the overall accumulation witnessed by GLD, further sticking to the shift in dominance among exchange-traded products.

JPMorgan also highlights that while spot Bitcoin ETFs are witnessing inflows, institutional derivatives markets give an alarming alarm. Hedge funds seem to be diminishing direct Bitcoin exposure even as ETF buyers step up.

Short interest in IBIT has really surged since the conflict started, while GLD short interest slipped.

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