JPMorgan: Capital Outflows from Gold ETFs After Iran War, Shifts to Bitcoin ETFs

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Morgan Stanley analysts have noted that since the outbreak of the Iran war at the end of last month, there has been a clear divergence in capital flows between Bitcoin and gold ETFs, reflecting a shift in investor allocation strategies between the two asset classes.

In a report released last Wednesday, the team led by Morgan Stanley Managing Director Nikolaos Panigirtzoglou pointed out that since the war began, the world’s largest gold ETF—SPDR Gold Shares—has experienced outflows amounting to about 2.7% of its assets under management; during the same period, BlackRock’s largest spot Bitcoin ETF—the iShares Bitcoin Trust—saw inflows of approximately 1.5% of its assets.

Analysts highlighted that the change in capital flows since February 27 has reversed this year’s lead of gold ETFs over Bitcoin ETFs, but it has not erased the stronger relative performance of gold funds in Q4 2025.

The report states that since October last year, capital flows have shown a rotation, especially among retail investors, from Bitcoin to gold. At that time, the iShares Bitcoin Trust experienced significant outflows, while SPDR Gold Shares attracted substantial inflows.

Although this rotation has occurred, over a longer period, Bitcoin ETFs still have accumulated more capital inflow than gold ETFs. Morgan Stanley analysts said that since 2024, the net inflow of the iShares Bitcoin Trust has been roughly twice that of SPDR Gold Shares.

They also noted that the assets under management of the iShares Bitcoin Trust nearly matched those of SPDR Gold Shares in July last year, but after market adjustments in October, Bitcoin prices fell back, widening the gap again.

Institutional Positions

Morgan Stanley stated that in terms of institutional holdings, recent months have shown a trend of institutions reducing their Bitcoin exposure.

Specifically, the short positions in the iShares Bitcoin Trust have increased, while those in SPDR Gold Shares have decreased, narrowing the gap. This indicates that hedge funds and other institutional investors are reducing their Bitcoin exposure while increasing their gold holdings.

However, even with rising short positions, the overall short level of the iShares Bitcoin Trust remains below that of SPDR Gold Shares. Analysts believe this mainly reflects gold’s longer history and deeper institutional investment base.

Options markets also show that investors are adopting a more cautious stance toward Bitcoin.

Since November last year, the put/call open interest ratio for the iShares Bitcoin Trust has risen above that of SPDR Gold Shares and has remained at a higher level. This is the first time that the demand for downside protection via Bitcoin ETF options has been consistently higher than for gold ETFs.

A higher put/call ratio indicates that investors are buying more protective put options, showing a greater concern for downside risk compared to call options. Analysts said this reflects increased demand from institutional investors to hedge against potential declines in Bitcoin.

They added that increased use of options in the iShares Bitcoin Trust may suggest that the market structure for Bitcoin is evolving, with investors moving beyond simple directional bets toward more complex hedging strategies.

Volatility and Market Indicators

However, despite the decline in short positions in SPDR Gold Shares and the lower put/call ratio suggesting a more bullish gold stance, analysts believe other market indicators do not fully favor gold.

In recent months, the implied volatility of options on SPDR Gold Shares has risen more than that of the iShares Bitcoin Trust, indicating that investors expect greater price volatility in gold.

Meanwhile, the market breadth of SPDR Gold Shares is weaker than that of the iShares Bitcoin Trust. Analysts pointed out that the Hui-Heubel ratio, a measure of market liquidity and breadth, has increased—indicating reduced participation in the gold ETF market.

In contrast, Bitcoin volatility appears to be compressing. Analysts believe this reflects deeper institutional holdings and improved market liquidity.

Morgan Stanley has previously expressed a positive outlook for the cryptocurrency market this year. Earlier this month, the bank reaffirmed its long-term Bitcoin price target of $266,000, based on valuation comparisons adjusted for volatility with gold.