Quick overview

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Bitcoin has proven more resilient than gold and silver, while precious metals have faced pressure from significant outflows, forced position unwinds, and declining liquidity.

Managing director Nikolaos Panigirtzoglou oversaw the analysis, which compared flow data, institutional positioning, momentum signals, and liquidity conditions for gold, silver, and Bitcoin

Gold has dropped by about 15% so far this month. A rally that had driven prices to a record close to $5,500 per ounce in January was reversed by the decline. Silver, which had peaked around $120, declined similarly.

JPMorgan attributes the decline to rising interest rates and a stronger dollar, as well as profit-taking by investors who had accumulated sizable holdings earlier in the year. In the first three weeks of March, withdrawals from gold ETFs totaled almost $11 billion.

Additionally, momentum indicators diverged. Commodity trading advisors and other trend-following investors drastically cut their exposure to gold and silver. For those metals, positioning signals fluctuated between overbought and below-neutral.

Momentum indicators for Bitcoin reversed course, moving from oversold to neutral. Conditions for liquidity also changed significantly. Gold’s market share declined to the point where it now lags behind Bitcoin, reversing a relationship that had previously favored gold.

Silver’s market depth deteriorated even more, which JPMorgan claimed could have contributed to the metal’s recent price drops.

Using data from Chainalysis, the analysts also mentioned an increase in cryptocurrency activity in areas impacted by rising geopolitical tensions. Locals transferred money from local exchanges to international platforms and self-custody wallets. Bitcoin was also practical due to its 24/7 availability, self-custody capability, and borderless settlement.