Financial institutions are quickly waking up to the “debasement trade,” according to commentators, which could be a boon for assets such as gold and Bitcoin.
Institutions have a new concept to cling to called the “debasement trade,” which will be the thing that protects them, said entrepreneur Anthony Pompliano in a podcast on Thursday.
It’s the same thing that goldbugs and Bitcoiners have been talking about for years, and now institutions have just realized that “no one is ever going to stop printing money,” he added.
“This now feels like there is no longer a debate about this. People realize the dollar and bonds are going to have a lot of trouble moving forward, and therefore Bitcoin and gold are definitely benefiting.”
The debasement trade is an investment strategy based on the expectation that fiat currencies will lose purchasing power over time due to monetary expansion through central bank money printing.
Investors position themselves in assets they believe will hold or increase in value as traditional currencies are debased, such as gold, which has gained 50% so far this year, and Bitcoin (BTC).
“We’ve been wanting to see private wealth management and financial advisers come to embrace Bitcoin as an allocation [in portfolios],” ProCap BTC chief investment officer Jeff Park told Pompliano.
Debasement trade is the “dark matter of finance”
Bitwise chief investment officer Matt Hougan shared his thoughts on the debasement trade on Thursday, saying that it was like “the dark matter of finance. You can’t quite touch it, but it affects everything.”
Related: Bitcoin leads record-breaking inflows as investors chase the ‘debasement trade’
“Recognition of the ‘debasement trade’ is accelerating for a simple reason: deficits mount, debt stacks higher, and accommodative policy suppresses real yields,” commented Onramp Bitcoin chief strategy officer, Brian Cubellis.
“Investors who expect ongoing dilution look for a yardstick that will not change on them, and that search shows up across both gold and Bitcoin.”
Not just digital gold
Bitcoin is not just digital gold, said Enrique Ho, the chief financial officer of Blink Wallet, on X.
“It is anti-debasement by design: fixed supply, transparent issuance, and trustless verification,” said Ho, adding it was “the purest expression of capital preservation in a world where money itself is being repriced.”
“This is the debasement trade — and it will define the next decade.”
US dollar debasement continues
The debasement of the US dollar is evident in the US Dollar Index (DXY), which measures the greenback against a basket of currencies.
It has fallen by around 12% this year, from a high of 110 in January to a three-year low of 96.3 in mid-September, before recovering slightly in October, according to TradingView.
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