JPMorgan analysts stated that Bitcoin may outperform gold in the second half of this year, driven by rising corporate demand and increasing support from U.S. states.

A team of analysts led by Nikolaos Panigirtzoglou noted in a report that the "fiat debasement trade" has evolved into a zero-sum game, with Bitcoin gradually gaining the upper hand.

The so-called fiat debasement trade refers to investors' strategy of choosing gold and Bitcoin as hedges against currency devaluation. Gold is a classic safe-haven asset, while Bitcoin, with its inherent scarcity (capped at 21 million coins), is often described as a similar store of value.

"Between mid-February and mid-April, gold was rising at the expense of bitcoin, while over the past three weeks, we have been observing the opposite, i.e., bitcoin rising at the expense of gold," the jpmorgan analysts said.

They added: "In all, we expect the YTD zero sum game between gold and bitcoin to extend to the remainder of the year, but are biased towards crypto-specific catalysts creating more upside for bitcoin over gold into the second half of the year."

Since peaking on April 22, gold prices have fallen nearly 8%, while Bitcoin has risen 18% over the same period.

Investment flows confirm this shift, with capital moving out of gold exchange-traded funds (ETFs) and into spot Bitcoin and crypto funds. Futures market data also reflects the same trend, with declining gold positions and increasing Bitcoin exposure.

JPMorgan noted that Bitcoin's recent strength is not solely due to gold's weakness but is also being driven by several crypto-specific factors.

For example, companies like Strategy (formerly MicroStrategy) and Metaplanet are increasing their Bitcoin holdings. Strategy plans to raise $84 billion by 2027 to purchase Bitcoin and has already achieved 32% of that goal.

Meanwhile, some U.S. states have begun incorporating Bitcoin into their reserve assets. New Hampshire now allows up to 5% of state assets to be allocated to Bitcoin and gold, while Arizona is establishing a digital asset reserve funded by staking rewards and airdrops, with a pledge not to raise taxes.

"As the list grows, with other U.S. states potentially considering adding bitcoin to their strategic reserves, this could turn out to be a more sustained positive catalyst for bitcoin," the analysts wrote.