Outflows in Gold ETFs, Inflows in Bitcoin ETFs

According to JPMorgan analysts, since the start of the war, the largest gold ETF, SPDR Gold Shares (GLD), has seen outflows equivalent to approximately 2.7% of its assets under management. In contrast, BlackRock’s iShares Bitcoin Trust (IBIT), a spot Bitcoin ETF, recorded inflows equal to roughly 1.5% of its assets during the same period. These figures indicate that investors have been rebalancing their portfolios after geopolitical developments, with some shifting from gold to Bitcoin. Analysts also noted that the divergence in flows observed since February 27 has largely reversed the advantage that gold ETFs had over Bitcoin ETFs earlier this year.

JPMorgan analysts included the following statement in their report:

“Recent fund flows indicate that investor positions are being redistributed between Bitcoin and gold, creating a clear divergence in the ETF market.”

Institutional Investor Positions

The JPMorgan report also reveals significant changes in institutional investor positions in recent months. According to analysts, short interest in IBIT has increased, while short interest in the gold ETF GLD has declined. This suggests that hedge funds and other large investors have at times reduced their Bitcoin exposure and shifted toward gold, which is traditionally viewed as a safe-haven asset. However, analysts also note that due to gold’s long-standing investment history and broader institutional adoption, short positions in gold generally remain lower compared to Bitcoin.

Data from the options market points to a similar trend. The put-to-call ratio for the IBIT ETF rising above that of GLD indicates that investors are implementing more hedging strategies against downside risk in Bitcoin. According to analysts, this shows that institutional investors are adopting a more cautious approach toward Bitcoin and are actively using hedging strategies against potential price volatility. Additionally, the increase in options usage suggests that the Bitcoin ETF market is becoming more sophisticated, with more advanced financial instruments being used and the market structure gradually maturing.

Signals of Volatility Compression in Bitcoin

Another notable point in the report concerns the changing volatility profile of Bitcoin. JPMorgan analysts stated that with deeper institutional ownership and increasing market liquidity, Bitcoin’s volatility is showing signs of compression. In contrast, implied volatility in gold ETF options has increased more rapidly in recent months, indicating that investors expect larger price swings in gold. According to JPMorgan’s assessment, the divergence in capital flows between Bitcoin and gold ETFs after the Iran war highlights a shift in investor portfolio allocation. While inflows into Bitcoin ETFs support market confidence, outflows from gold ETFs point to a short-term change in investor preferences. In the long term, however, analysts maintain their positive outlook on the crypto market. In previous evaluations, JPMorgan reiterated its long-term Bitcoin price target of $266,000, based on volatility-adjusted valuation models.

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Recent increases in geopolitical risks and their potential impact on inflation are causing expectations about monetary policy to be reconsidered.

Inflation Concerns Back on the Agenda! Rate Cut Cancelled?

Ongoing conflicts between the US and Iran have reignited discussions about inflation risks in global markets. Possible effects on energy prices and global supply chains are strengthening concerns that price pressures could increase.

These developments may lead the FED to adopt a more cautious stance on interest rate policy. Analysts note that if geopolitical risks create upward pressure on inflation, monetary policy could remain tighter.

JPMorgan: The Rate Cut Cycle May Have Ended

According to a report in South Korea-based Maeil Business Newspaper, JPMorgan has updated its expectations regarding the FED’s interest rate policy. Based on evaluations included in a report published by the New York office of the Bank of Korea, the bank believes that the US rate-cutting cycle may have ended in December.

JPMorgan had previously raised the possibility of limited rate cuts in 2026. However, following recent developments, the bank now states that it does not expect any rate cuts this year.

Interest Rates Expected to Remain Unchanged

According to the new projection shared by the bank, the FED’s policy rate is expected to remain steady in the 3.5% to 3.75% range throughout 2026. JPMorgan believes there is a possibility that inflation will remain above the FED’s target level in the foreseeable future.

For this reason, a rapid easing of monetary policy is not anticipated. On the contrary, if inflation remains persistently high, a different policy path could come into focus.

Rate Hike Scenario for 2027

Another striking point in JPMorgan’s assessment is the potential for a future rate increase. The bank forecasts that the FED’s next move could be a rate hike in 2027, potentially pushing the policy rate back up to the 4% level.

This scenario indicates that a prolonged tight policy stance could continue.

Differing Expectations in the Market

Meanwhile, there are also varying views in financial markets regarding the FED’s interest rate path. While institutions such as Citi and TD Cowen expect three rate cuts this year, Barclays, Bank of America, Goldman Sachs, Morgan Stanley, Nomura, and Wells Fargo forecast two rate cuts. Deutsche Bank believes there could be only a single rate cut during the year.

These differing forecasts show that uncertainties in the global economy and the inflation outlook remain contentious in terms of their impact on monetary policy. Data and economic indicators to be released by the FED in the coming period will play a critical role in determining the direction of interest rate policy.

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What Is the CLARITY Act Designed to Do?

Commonly referred to as the CLARITY Act, the proposed bill seeks to establish a comprehensive regulatory framework for digital assets in the United States. The legislation has already advanced in the House of Representatives, while discussions and negotiations continue in the Senate.

Two primary sticking points remain unresolved. The first concerns whether stablecoin issuers should be allowed to offer yield or rewards to holders. Crypto-native firms argue that yield-bearing stablecoins are essential for competitiveness and innovation. Traditional banks, however, contend that allowing interest-like returns on stablecoin balances could draw deposits away from the banking system and introduce financial stability risks.

The second area of contention involves conflict-of-interest provisions. Some lawmakers are pushing for restrictions that would limit the ability of senior government officials — including the President — and their families to participate in certain crypto-related financial activities. Reports suggest that discussions between industry representatives, banking groups, and policymakers are ongoing, with the possibility of compromise still on the table.

Eight Potential Tailwinds if Passed

JPMorgan analysts outline eight potential benefits should the bill become law.

First, it would clearly distinguish between “digital commodities” regulated by the CFTC and “digital securities” overseen by the SEC, reducing compliance uncertainty. A grandfather provision could allow certain ETF-linked assets such as XRP, Solana, Litecoin, Hedera, Dogecoin, and Chainlink to fall under the more flexible CFTC framework.

Second, early-stage projects would be granted a transition period allowing up to $75 million in annual fundraising without full SEC registration while progressing toward decentralization. Third, tokens initially sold as securities could later transition to commodity status once sufficiently decentralized.

Fourth and fifth, clearer rules for intermediaries and custody could enable institutions like BNY Mellon and State Street to directly safeguard digital assets, while also supporting tokenization of traditional securities. Sixth, miners, validators, and software developers would receive exemptions from broker-style reporting during development under certain conditions.

Seventh, small crypto payments could qualify for tax exemptions, and staking taxation would gain clarity. Eighth, by defining stablecoins more as digital cash than investment products, the bill could shift institutional interest toward tokenized deposits.

If enacted by mid-year as anticipated, the CLARITY Act could significantly reshape the regulatory landscape and improve market structure clarity heading into the second half of the year.

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According to the JPMorgan analyst team, if the long-awaited regulatory clarity is achieved, institutional capital inflows could accelerate and market dynamics could strengthen significantly.

Bitcoin Dips Below Production Cost

This assessment comes at a time when market sentiment remains fragile. Bitcoin recently fell below its estimated production cost of around $77,000. Historically, this level has been considered a “soft floor” during downturns. However, the latest pullback has further reinforced the cautious atmosphere following the sharp correction in the last quarter of the previous year.

This picture suggests that a new bullish wave will only be possible with a strong catalyst.

Shift in Power from Retail to Institutional

According to JPMorgan’s base case, the next bull cycle will differ from previous retail-led rallies. Today, approximately 65% of large-scale Bitcoin transactions are executed by institutional investors.

Additionally, the significant decline in 30-day realized volatility on an annualized basis points to more balanced capital flows and reduced speculative fluctuations. In 2025, a record $130 billion flowed into digital asset products. The bank forecasts that this figure could increase even further in 2026 if regulatory clarity is achieved.

This capital is not expected to be limited to spot purchases alone; it is anticipated to extend into venture capital investments, mergers and acquisitions, as well as initial public offerings of crypto exchanges, payment companies, and blockchain infrastructure firms.

Determining Factor: Market Structure Legislation

At the center of the forecasts lies federal-level market structure reform. The Digital Asset Market Clarity Act introduced in the House of Representatives aims to assign primary oversight of digital commodity spot markets to the CFTC while preserving the SEC’s authority over investment contracts.

On the Senate side, the Responsible Financial Innovation Act proposes a more hybrid model. Under this framework, certain tokens would fall under CFTC oversight, while periodic reporting obligations to the SEC could continue in cases involving capital raising.

Previously introduced, the Financial Innovation and Technology for the 21st Century Act aimed to reduce jurisdictional confusion by defining categories such as “permitted payment stablecoins.”

In summary, according to JPMorgan, there is potential for a strong crypto rally in the second half of 2026; however, the realization of this scenario appears to depend on regulatory clarity emerging from Washington.

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What the Court Documents Reveal

According to a written statement submitted by Dan Wilkening, JPMorgan’s former chief administrative officer, the bank informed the plaintiffs in February 2021 that specific accounts held within its commercial and private banking divisions would be terminated. The statement appears in the context of a lawsuit filed by Trump against the bank.

Trump’s legal team argues that the account closures were politically motivated and effectively placed him, his family, and affiliated businesses on a financial “blacklist.” The lawsuit, filed in late January, seeks $5 billion in damages. Attorneys representing Trump have characterized JPMorgan’s acknowledgment as a significant concession supporting their broader claims.

JPMorgan, however, disputes the allegations. Spokesperson Trish Wexler stated that the lawsuit lacks merit and emphasized that account closures are driven by legal and regulatory risk assessments rather than political or religious considerations. The bank maintains that compliance obligations and regulatory expectations sometimes necessitate such decisions.

From Traditional Banking to Crypto

Members of the Trump family have publicly linked the account closures to their increased interest in digital assets. Eric Trump has previously stated that several of his banking relationships were abruptly terminated following the unrest in Washington, which prompted the family to explore alternative financial infrastructures.

According to his remarks, the experience accelerated their engagement with blockchain technology and decentralized finance. In the aftermath, the Trump family moved forward with the launch of World Liberty Financial (WLFI), a crypto-focused platform. During his second term, Donald Trump has also advocated for a more supportive regulatory framework for digital assets.

Broader Implications

JPMorgan’s formal acknowledgment could reignite debate over the scope of banks’ authority to terminate client relationships and the transparency surrounding such decisions. While the legal outcome remains uncertain, the case sits at the intersection of banking regulation, political accountability, and the evolving role of crypto in the financial system.

This article is for informational purposes only and does not constitute investment advice.

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Central Banks as the Key Driver for the Gold Price

According to JPMorgan’s analysis, central banks remain the cornerstone of gold’s long-term bullish structure. In recent years, rising geopolitical tensions and concerns over reserve diversification have encouraged monetary authorities to reduce reliance on the U.S. dollar. Gold has increasingly filled that role as a neutral reserve asset.

This trend is not limited to official institutions. Persistent inflation risks and global economic uncertainty have also pushed private investors to revisit gold as a portfolio hedge. JPMorgan notes that this dual demand—public and private—creates a structural tailwind that could support prices well beyond current levels.

Volatility Still Part of the Picture

Despite the optimistic outlook, JPMorgan emphasizes that the path higher is unlikely to be smooth. Shifts in interest rate expectations, monetary policy signals, and global liquidity conditions can still trigger short-term pullbacks. While gold benefits from its safe-haven status over the long run, it remains sensitive to changes in real yields and currency strength in the near term.

This combination of strong underlying demand and macro-driven price swings suggests a volatile but upward-biased market structure.

Where Gold Stands Now

At present, gold is trading around $4,942 per ounce, significantly below JPMorgan’s $6,300 target. The gap highlights the bank’s conviction that the broader trend remains intact, even if interim corrections occur. Analysts generally agree that any move toward such levels would likely unfold gradually rather than through a rapid, linear rally.

Silver Also Under Pressure

Gold is not the only precious metal experiencing sharp price movements. Silver has seen a steep pullback, with its price falling to around $75 per ounce following recent selling pressure. Compared to gold, silver’s heavier exposure to industrial demand makes it more sensitive to shifts in economic expectations and risk appetite.

The recent decline underscores the elevated volatility across the precious metals complex and reinforces the importance of a cautious, data-driven approach in the current environment.

This content is for informational purposes only and does not constitute investment advice. Markets are inherently risky, and independent research is essential before making any investment decisions.

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The Fed’s Core Message: Patience and Data First

The prevailing interpretation of the latest decision is that the Fed wants to observe the full impact of the three rate cuts implemented previously. Inflation has moderated but remains above target, while the labor market shows resilience without clear signs of deterioration. This backdrop supports a “wait-and-see” approach from Fed Chair Jerome Powell, signaling restraint rather than urgency.

Barclays and Bank of America: Cuts Expected, but Not Soon

Barclays anticipates a total of 50 basis points in rate cuts during 2026. According to the bank, these moves could materialize in June and December. Its outlook suggests that downside risks to employment and upside risks to inflation are now more balanced, reducing the need for rapid easing.

Bank of America shares the 50-basis-point view but differs on timing. It expects cuts to arrive earlier, potentially in June and July. The bank also notes that current market pricing could leave room for a relatively dovish surprise from the Fed if incoming data softens.

Citigroup: A Normalization-Driven Path

Citigroup continues to project 50 basis points of easing, likely split between June and September. However, Citi frames these cuts as part of a gradual normalization process rather than a reaction to immediate economic stress. For this scenario to play out, clearer and more sustained progress on inflation would be required, alongside broader consensus within the Federal Open Market Committee.

JPMorgan: No Cuts on the Horizon

JPMorgan Chase stands out with the most conservative view. The bank does not expect any rate cuts in 2026. Its analysts argue that after three precautionary cuts, many policymakers may see a prolonged pause as the most prudent option. Powell is also expected to emphasize that the current policy stance is sufficient to manage risks tied to the Fed’s dual mandate.

Wells Fargo: Earlier, But Limited Easing

Wells Fargo takes a middle-ground approach, forecasting 50 basis points of cuts in March and June. The bank cautions that the longer the Fed waits, the higher the economic threshold becomes for justifying additional easing. While an early signal of accommodation is possible, Wells Fargo does not expect aggressive guidance.

A Divided Outlook, One Common Theme

Despite varying forecasts, a common thread runs through all projections: the Fed is unlikely to rush. Markets may be forced to remain patient, parsing each data release and policy signal carefully. Whether 2026 brings multiple rate cuts, a modest adjustment, or none at all, communication and tone will be just as influential as the decisions themselves.

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Allegations of Abrupt Account Termination

According to Trump’s legal claims, JPMorgan closed several accounts associated with him in the weeks following the January 6, 2021, attack on the US Capitol. Trump argues that these actions were taken without prior notice or justification, violating fundamental principles of commercial conduct and good faith.

The lawsuit accuses JPMorgan of harming Trump’s commercial reputation and breaching implied contractual obligations. Additionally, JPMorgan CEO Jamie Dimon is named personally, with allegations that he violated Florida laws governing deceptive and unfair trade practices.

JPMorgan Pushes Back Against Political Motive Claims

JPMorgan has strongly rejected the allegations, describing the lawsuit as unfounded. A spokesperson for the bank stated that JPMorgan does not close accounts based on political affiliation or religious beliefs.

Jamie Dimon has previously addressed similar accusations from other sectors, noting that the bank has terminated accounts across a wide range of political and religious backgrounds. He has consistently maintained that such decisions are driven by risk management and compliance considerations rather than ideology.

What is Trump Argument?

A central element of Trump’s argument is the assertion that his public commentary surrounding the January 6 events influenced JPMorgan’s decision-making. Trump has repeatedly claimed that the 2020 presidential election was manipulated and characterized the Capitol breach as a justified response.

Trump ultimately lost that election to Joe Biden by a margin of 74 electoral votes, a fact that remains relevant to the broader political context surrounding the lawsuit.

Debanking Concerns Extend Beyond Trump

While the lawsuit directly targets JPMorgan, it is widely seen as part of a broader struggle over access to financial services in the United States. In recent years, executives in the cryptocurrency and technology sectors have voiced concerns that banks are systematically denying services to certain industries or individuals.

This phenomenon has become widely known as “Operation Chokepoint 2.0,” a term used to describe what critics believe is a coordinated effort to limit banking access for crypto-related businesses and politically controversial figures.

Growing Political Pressure and Regulatory Scrutiny

Throughout 2024, more than 30 technology and crypto executives publicly claimed they had been debanked, pushing the issue further into the political spotlight. In response, Trump signed an executive order in August directing US regulators to investigate alleged politicized or unlawful debanking practices and propose safeguards to prevent them.

Republican lawmakers have also urged that the market structure legislation under review in the US Senate explicitly address debanking concerns. Even before the end of the Biden administration in January 2025, Republican officials were calling for formal investigations into banking restrictions affecting the crypto industry.

A Defining Case for Finance and Politics

Trump’s lawsuit against JPMorgan represents more than a dispute over closed accounts. It highlights a deeper conflict at the intersection of law, politics, and financial access in the United States. The outcome could have far-reaching implications, not only for traditional banking institutions but also for crypto companies and other industries that rely on stable access to the financial system.

As the case moves forward, it may help define where banks’ risk discretion ends and where allegations of political or ideological discrimination begin.

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No Rate Cuts Expected in 2026

In a client note dated January 9, JPMorgan outlined a macroeconomic scenario that leaves little room for monetary easing. The bank forecasts stronger economic growth and improving labor market conditions in 2026, alongside core inflation remaining above the 3% threshold. This combination, JPMorgan argues, significantly weakens the case for rate cuts.

Chief Economist Michael Feroli emphasized that even under the leadership of a more dovish Federal Reserve chair, convincing the Federal Open Market Committee to lower rates would be challenging given the economic backdrop. JPMorgan’s base case assumes that policy rates remain unchanged throughout 2026, with the first potential rate increase—25 basis points—arriving in the third quarter of 2027.

Market Expectations Tell a Different Story for Rate Cut

JPMorgan’s outlook stands in sharp contrast to current market pricing. Data from the CME FedWatch Tool suggests that investors are still positioning for monetary easing. Markets assign a 32% probability to two rate cuts in 2026, while the likelihood of a single cut stands at 25%. Expectations for three rate cuts are priced at 22%, and only an 8% probability is assigned to the Fed keeping rates unchanged for the entire year.

This divergence highlights a growing gap between institutional forecasts and investor sentiment regarding the Fed’s future policy path.

Political Pressure and the Trump Factor

Adding complexity to the outlook is the anticipated appointment of a new Federal Reserve chair by US President Donald Trump in the coming months. The new chair’s four-year term is set to begin in May. Trump has historically advocated for significantly lower interest rates, previously arguing that policy rates should be closer to 1%.

At present, the Fed’s benchmark interest rate sits in the 3.5%–3.75% range, underscoring the distance between political preferences and current monetary policy.

Rising Tensions Between the White House and the Fed

Relations between the White House and the central bank have grown increasingly strained. Over the weekend, Fed Chair Jerome Powell disclosed in a video statement that the Department of Justice had requested testimony related to statements he made last year before Congress concerning the cost of renovating Federal Reserve buildings. Trump has previously attempted to use these renovation expenses as grounds for challenging Powell’s leadership.

Together, these developments suggest that the Federal Reserve’s policy decisions in the coming years will be shaped not only by economic data, but also by intensifying political pressure.

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JPMorgan Pushes Tokenized Cash Toward Production

One of the most concrete signals of this shift comes from JPMorgan. The bank announced plans to issue its US dollar–denominated deposit token, JPM Coin (JPMD), directly on the Canton Network. This marks a significant evolution from closed, internal systems toward interoperable blockchain environments designed for regulated financial activity.

The integration is being developed in collaboration with Digital Asset, the company behind the Canton Network, and JPMorgan’s blockchain unit, Kinexys. The goal is to enable regulated digital cash to move securely and efficiently across networks while maintaining privacy and compliance. JPM Coin represents a digital claim on actual dollar deposits held at the bank, targeting institutional use cases such as settlements and cross-network transfers.

Morgan Stanley Expands Crypto Access via ETFs

Morgan Stanley is taking a different but equally meaningful approach by bringing crypto exposure to traditional investors. The bank has filed regulatory applications to launch exchange-traded funds tracking Bitcoin and Solana. If approved, these products could be distributed to more than 19 million clients through Morgan Stanley’s wealth management arm.

The decision follows the strong performance of spot Bitcoin ETFs in the United States, which have attracted substantial inflows since their launch. By offering crypto exposure through familiar investment vehicles, Morgan Stanley is lowering the barrier for mainstream participation.

Barclays Enters the Stablecoin Infrastructure Space

In the UK, Barclays has made its first direct investment related to stablecoins. The bank backed Ubyx, a US-based clearing and settlement platform designed to connect regulated stablecoin issuers with financial institutions. While Barclays previously emphasized the risks of digital assets, this investment signals growing confidence in stablecoins as part of future payment infrastructure.

Ubyx aims to improve interoperability and settlement efficiency across regulated digital dollar systems, aligning closely with the needs of large banks.

Bank of America Normalizes Bitcoin ETFs

Bank of America has also taken a notable step by allowing its private banking and Merrill Edge advisers to recommend spot Bitcoin ETFs to clients. Approved products include offerings from Bitwise, Fidelity, BlackRock, and Grayscale, which together manage over $100 billion in Bitcoin.

The bank has indicated that investors comfortable with volatility may consider allocating a modest 1% to 4% of their portfolios to digital assets.

From Observers to Builders

Taken together, these developments show that Wall Street is no longer standing on the sidelines. Through tokenized cash, stablecoin infrastructure, and crypto-linked investment products, major banks are actively shaping how blockchain technology integrates into global finance. The shift is quiet, deliberate, and increasingly irreversible.

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