Gold and Bitcoin can be hedges against down stock markets and the devaluation of the U.S. dollar

JPMorgan analysts in a recent note to clients highlighted cryptocurrency-specific catalysts that could lead to Bitcoin outperforming gold in the remaining months of the year. First, several companies have put Bitcoin on their balance sheets, and many plan to add more. The best known of the bunch is Strategy , formerly known as MicroStrategy, which plans to invest $57 billion in Bitcoin through 2027.

Second, two states -- Arizona and New Hampshire -- recently enacted laws that establish strategic Bitcoin reserves, and about two dozen others have introduce similar legislation. That positions state governments as potential buyers of Bitcoin. JPMorgan analysts wrote, "As the list grows, with other U.S. states potentially considering adding Bitcoin to their strategic reserves, this could turn into a more sustained positive catalyst for Bitcoin."

However, JPMorgan views gold as the more prudent option for risk-averse investors. "In our view, gold may be positioned to offer some protection against further geopolitical risk and dollar weakness," analysts wrote in their mid-year outlook. "We are skeptical that Bitcoin and other crypto assets offer the potential to improve portfolio resilience. Despite their low correlations to traditional assets, crypto assets have historically made portfolios more fragile."

Here is the bottom line: Tariffs imposed by the Trump administration are expected to raise prices and slow economic growth. Also, the tax and spending bill that recently passed the House of Representatives would add an estimated $3 trillion to federal debt during the next decade. Those developments have left some investors hesitant about owning U.S. stocks and bonds. So, demand for U.S. currency has declined, causing the dollar to lose value.

That trend may or may not intensify in the coming months. But investors concerned about the possibility can hedge against down stock markets and the devaluation of the U.S. dollar by owning gold or Bitcoin. Personally, I think gold is the better option for anyone that cannot tolerate volatility. But I also think Bitcoin can outperform gold (especially in the long run) as more companies and governments adopt the cryptocurrency as a reserve asset.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, and JPMorgan Chase. The Motley Fool has a disclosure policy .

Bitcoin vs. Gold: The Best Buy Right Now, According to a Wall Street Analyst was originally published by The Motley Fool