Investors are increasingly buying hard assets like Bitcoin and gold to hedge against the perceived weakening of fiat currencies, a trend now gaining mainstream traction and pushing prices higher.
October 5, 2025
Source:
Seeking Alpha
Mainstream Investors Embrace Hard Assets
A popular investment strategy known as the "debasement trade" is gaining significant momentum, boosting the value of hard assets like Bitcoin and gold. The trade centers on the belief that government monetary policies are eroding the value of fiat currencies, particularly the U.S. dollar.
This strategy, long discussed in crypto circles, has now entered the mainstream. Major financial institutions and economists are acknowledging its validity as global debt surpasses $300 trillion amid persistent fiscal deficits. According to reports from Coindesk, this marks a notable shift in market sentiment.
What is the Debasement Trade?
The core of the debasement trade is protecting purchasing power. Investors move capital from cash and bonds into assets with a finite supply to hedge against currency devaluation. Key drivers include:
Expansive Money Printing: Central banks expanding the M2 money supply.
Persistent Fiscal Deficits: Governments spending more than they earn, leading to increased debt.
Inflation Fears: Concerns that currency value will decline, making goods more expensive.
This environment has pushed both retail and institutional players to reconsider traditional portfolio allocations.
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Source:
The Wall Street Journal
Market Dynamics and Price Implications
The debasement trade has had a tangible impact on asset prices in 2025, with Bitcoin emerging as a primary beneficiary alongside gold.
Retail Leads the Charge
JPMorgan analysts report that retail investors have been the dominant force in the recent market surge. The primary vehicle for this has been the highly popular spot Bitcoin ETFs, which offer easy exposure to the asset.
Institutional involvement, while present, has been more measured. Large firms have favored regulated products like CME futures to manage their exposure, indicating a more cautious approach.
Bitcoin's Price Outlook
The increased demand has fueled bullish price targets. JPMorgan has projected that Bitcoin could reach as high as $165,000, a roughly 40% increase from its early October price of $119,000. This estimate is based on Bitcoin achieving a portfolio allocation comparable to that of gold among investors.
Market indicators reflect this sentiment. The Bitcoin fear and greed index has frequently surpassed 70, signaling strong bullish momentum, while on-chain metrics show accumulation by long-term holders, as tracked by outlets like Blockchain News.
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Source:
MarketWatch
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