Investors are trimming exposure to both bitcoin and gold, pointing to a broader cooling in demand for inflation and geopolitical hedges as markets reassess risks linked to Middle East tensions.

The “debasement trade” that previously supported both assets during periods of elevated uncertainty is fading, according to JPMorgan analysts led by Nikolaos Panigirtzoglou.

In a note released Thursday, the bank said investors have been withdrawing capital from both bitcoin and gold ETFs simultaneously, while CME futures positioning tied to the two markets has also softened. The parallel decline suggests a broad unwind of macro hedge trades that gained traction earlier in the year amid inflation concerns and geopolitical instability.

Data from Farside Investors shows bitcoin ETFs have recorded steady outflows over the past two weeks, a pattern that has tracked closely with weakening demand in gold ETFs. Futures positioning across both assets has also declined, indicating reduced institutional participation rather than a rotation between bitcoin and gold.

Panigirtzoglou stressed that the flows do not indicate investors are shifting from bitcoin into gold, but rather that both trades are losing momentum at the same time.

“Bitcoin had been the main manifestation of the debasement trade since the start of the Iran conflict,” the report noted.

The debasement trade refers to positioning in assets viewed as stores of value during periods of currency weakness, rising inflation risk, or expanding fiscal deficits. Bitcoin and gold typically benefit in environments where investors expect higher government spending or prolonged monetary easing.

Those themes strengthened earlier this year as Middle East tensions pushed oil prices higher and revived concerns about renewed inflationary pressure across global markets.

However, JPMorgan suggested the recent reversal may reflect expectations that geopolitical risks are easing, with investors possibly positioning ahead of diplomatic progress between the United States and Iran. Such a shift would reduce demand for traditional hedges that had supported both bitcoin and gold.

Overall, the bank’s analysis points to a broader cooling in macro-driven positioning as investors step back from defensive trades amid improving risk sentiment.