If the debasement trade would catapult Bitcoin, why is the market down?
John: Hey everyone, I’m John, a veteran writer for Blockchain Bulletin, where I break down the wild world of crypto in simple, everyday language. Today, we’re diving into the debasement trade thesis and its impact on Bitcoin—especially why the market seems sluggish despite all the hype. For readers who want a full step-by-step guide, you can also check this exchange guide.
Lila: Hi, I’m Lila, John’s curious assistant always eager to learn more about Web3. John, what’s this debasement trade all about, and why isn’t Bitcoin soaring if it’s supposed to be such a big deal?
What is the Debasement Trade?
John: Great question, Lila. The debasement trade is essentially investors betting against traditional currencies like the US dollar weakening over time due to things like high government debt and inflation. It’s like hedging your bets by moving into assets that aren’t tied to any one country’s printing press—think gold or Bitcoin.
Lila: Okay, that sounds like protecting your money from losing value. But how does Bitcoin fit into this? Isn’t it super volatile?
John: Exactly, Lila—Bitcoin is often called “digital gold” because its supply is capped at 21 million coins, making it resistant to the kind of debasement fiat money faces. In the past, during inflationary periods like post-2020, we’ve seen Bitcoin rally as a store of value. As of now in 2025, with US debt surging, this thesis is driving demand, according to reports from JPMorgan dated 2024-10-11.
Background on the Thesis
Lila: So, when did this idea really take off? I remember hearing about it recently.
John: The debasement trade gained mainstream traction after JPMorgan’s report on 2024-10-11, highlighting how fiscal policies could erode currency value. Bitcoiners have discussed it for years, but mainstream economists caught on in 2025, as noted in Blockchain News on 2025-10-03. It’s based on expectations of unchecked government borrowing, pushing investors toward scarce assets.
Lila: Scarce assets—does that mean like limited edition sneakers, but for money?
John: Haha, spot on analogy, Lila (just without the resale drama). In the past, gold boomed during currency crises, like in the 1970s. For Bitcoin, events like the 2020 halving on 2020-05-11 reinforced its scarcity narrative, setting the stage for today’s trends.
Current Market Trends in 2025
John: As of 2025-10-12, Bitcoin has actually been on a tear, hitting record highs around $125,000 and beyond, fueled by this debasement narrative. Bloomberg reported on 2025-10-05 that Bitcoin set a new all-time high amid a risk rally tied to US government shutdown concerns. Gold has also surged past $4,000 per ounce, as per Financial Content on 2025-10-10.
Lila: Wait, the original article mentioned Bitcoin at $117,729.81, down from $126,000— that sounds like a dip. What’s going on there?
John: Sharp eye, Lila. Short-term dips happen due to positioning and risk-off flows, as CryptoSlate noted in their piece. But overall in 2025, the trend is upward: The Guardian on 2025-10-09 explained how debasement fears are driving gold, Bitcoin, and even stocks to records, with investors fleeing dollar weakness.
Lila: So, it’s not all doom and gloom? Why the temporary downs?
John: Markets fluctuate—think of it like waves in the ocean. CNBC on 2025-10-11 highlighted that while Bitcoin and gold hit peaks, factors like government shutdowns create short-term volatility. Yet, JPMorgan’s bullish outlook for 2025, from their 2024-10-11 report, points to sustained demand as debt piles up.
Why Isn’t the Market Catapulting Higher?
Lila: If debasement is such a booster, why any downside at all? Is there unique risk here?
John: Bloomberg’s newsletter on 2025-10-09 warns that Bitcoin devotees face risks like regulatory shifts or crypto-specific volatility, even in a debasement rally. For instance, while Bitcoin approached records on 2025-10-03 per Bloomberg, medium-term dips stem from profit-taking and broader market sentiment.
Lila: Regulatory shifts? Like what governments might do?
John: Yes, things like potential crackdowns on crypto, but nothing speculative—based on verified news. Cointelegraph on 2025-10-10 noted the debasement trade is fueling the rally despite dollar weakness, but short-term factors like shutdowns can cause pullbacks, as Morningstar discussed on 2025-10-05.
Use Cases and Examples
John: Practically, the debasement trade means diversifying into Bitcoin for inflation protection. For example, institutions like MicroStrategy have stacked Bitcoin since 2020, treating it as a treasury asset amid currency concerns.
Lila: Cool—any tips for beginners on how to approach this?
John: Sure, here’s a quick list of verified ways to engage safely:
- Research via trusted sources like CoinDesk for real-time prices and trends.
- Use regulated exchanges—check our guide linked earlier for global options as of 2025.
- Start small: Allocate a tiny portfolio percentage to Bitcoin, as JPMorgan suggested in their 2024-10-11 report.
- Monitor events: Watch for halvings, like the next one expected around 2028-04.
- Pair with gold for balance, as both are debasement hedges per Livewire Markets on 2025-10-07.
Lila: That list makes it less intimidating—thanks!
Risks and Safeguards
John: No sugarcoating: Volatility is real. Bitcoin dropped sharply in 2022, but rebounded. Safeguards include using hardware wallets and avoiding leverage, based on Cointelegraph advice.
Lila: And for the debasement angle, any specific risks?
John: If inflation cools unexpectedly, the thesis weakens—but as of 2025-10-12, with debt trends, it’s holding strong. Bloomberg on 2025-10-09 points out crypto’s unique risks like hacks, so always verify sources and use two-factor authentication.
Looking Ahead
Lila: What’s next for Bitcoin and this trade?
John: Looking ahead, if debasement fears persist into 2026, analysts from TradingView on 2025-10-10 predict continued gains for Bitcoin and Ethereum. Regulatory clarity, like potential US ETF expansions, could boost it further—no speculation, just based on ongoing discussions in Rask Media on 2025-10-10.
John: Wrapping up, the debasement trade is a fascinating lens on why Bitcoin’s shining in 2025, even with short dips—it’s all about long-term value protection in uncertain times. Remember, crypto’s exciting but do your homework. And if you’d like even more exchange tips, have a look at this global guide.
Lila: Totally agree—stay curious and informed, folks! This trade shows how crypto can be a smart hedge, but patience is key.
This article was created using the original article below and verified real-time sources:
- If the debasement trade would catapult Bitcoin, why is the market down?
- Bitcoin Rises to a Record as ‘Debasement’ Trade Spurs Risk Rally
- ‘The debasement trade’: is this what’s driving gold, bitcoin and shares to record highs?
- Why Wall Street’s old ‘wall of worry’ and new ‘debasement trade’ are boosting gold, bitcoin in typically volatile October