Following Donald Trump's presidential win, JPMorgan
What Happened: This investment approach is designed to benefit from currency devaluation, often resulting from inflationary or expansionary fiscal policies, The Block reported.
In such scenarios, assets like Bitcoin and gold are viewed as reliable stores of value, helping to safeguard wealth against decreasing purchasing power.
The "debasement trade," according to JPMorgan's report led by managing director Nikolaos Panigirtzoglou, will likely be strengthened by the Trump administration's potential fiscal expansion, tariffs and geopolitical policies.
"We anticipate an increase in the debasement trade due to debt expansion and heightened geopolitical tension," Panigirtzoglou explained, noting that although gold experienced an initial drop, Bitcoin surged after Trump's victory, underscoring investor confidence in the trade.
While the analysts refrained from setting a specific 2025 price target for Bitcoin, Panigirtzoglou expressed a "positive outlook for Bitcoin through 2025."
The trajectory of central bank gold purchases will play a vital role in determining gold's future price, JPMorgan analysts highlighted.
They pointed to an increase in gold reserves by central banks after the Ukraine conflict and the resulting sanctions on Russia in 2022.
While the People's Bank of China paused gold acquisitions last April, JPMorgan anticipates that ongoing global tensions and tariff policies may encourage central banks to diversify further from dollar reserves into gold.
Retail investors have also shown increased interest in Bitcoin and gold, with rising ETF investments in both assets since mid-2023, a trend JPMorgan expects to continue into 2025.
Analysts believe Trump's policies could further bolster these assets, making them appealing investments in uncertain economic conditions.
JPMorgan's report also suggests that Bitcoin's growth may receive additional support from MicroStrategy's
This plan involves raising $42 billion over three years-half through equity and half through fixed-income securities-with $10 billion earmarked specifically for Bitcoin investments in 2025 alone.
This projected investment matches the company's total Bitcoin purchases since mid-2020, indicating a substantial commitment to Bitcoin as a long-term asset.
