As fears over fiat currency devaluation grow, mainstream financial institutions are increasingly adopting the “debasement trade” as a core strategy, a shift that could have lasting implications for the cryptocurrency and precious metals markets. This approach involves positioning in assets like Bitcoin and gold, seen as safe havens amid ongoing monetary expansion. Experts suggest that this trend signals a major overhaul in how institutional investors view and incorporate hard assets in volatile economic conditions.
Debasement trade is the “dark matter of finance”
Bitwise’s chief investment officer, Matt Hougan, characterized the debasement trade as “the dark matter of finance,” pointing out that although it isn’t directly observable, it influences the entire financial ecosystem. Efforts to recognize and capitalize on the impending decline of fiat currencies are fueling inflows into Bitcoin, which is increasingly viewed as a reliable store of value in the era of persistent monetary expansion.
“Recognition of the ‘debasement trade’ is accelerating for a simple reason: deficits are mounting, debt is soaring, and accommodative policies suppress real yields,” said Brian Cubellis, chief strategy officer at Onramp Bitcoin. “Investors expecting ongoing currency dilution seek assets that won’t lose their value, which explains the rising interest in gold and Bitcoin.”
Not just digital gold
Bitcoin’s role extends beyond being a digital version of gold, according to Enrique Ho, CFO of Blink Wallet. “Bitcoin is designed as an anti-debasement asset, with a fixed supply, transparent issuance, and trustless verification,” he explained. “It embodies the purest form of capital preservation in a financial landscape where currencies are constantly re-priced.”
“This is the debasement trade — and it will define the next decade.”
U.S. dollar’s ongoing debasement
The weakening of the U.S. dollar is clearly reflected in the U.S. Dollar Index (DXY), which measures the dollar against a basket of currencies. This index has fallen approximately 12% this year, dropping from a high of 110 in January to a three-year low of 96.3 in mid-September, before recovering slightly in October, exemplifying the ongoing dollar debasement.
