Financial institutions are rapidly becoming aware of the “debasement trade,” according to experts, which could favor assets like gold and Bitcoin.
Institutions now have a concept to hold onto called the “debasement trade,” which will serve as their protection, stated entrepreneur Anthony Pompliano during a podcast on Thursday.
This aligns with what gold enthusiasts and Bitcoin advocates have been discussing for years, as institutions have finally recognized that “nobody is going to stop printing money,” he remarked.
“It now seems there is no longer a debate about this. People understand the dollar and bonds will face significant challenges ahead, and thus Bitcoin and gold are undeniably benefitting.”
The debasement trade refers to an investment strategy anticipating that fiat currencies will lose purchasing power over time due to monetary expansion from central bank money printing.
Investors place their bets on assets they expect to maintain or appreciate in value as traditional currencies diminish, like gold, which has appreciated by 50% this year, and Bitcoin (BTC).
“We’ve been hoping to see private wealth management and financial advisors start to incorporate Bitcoin into their portfolios,” ProCap BTC chief investment officer Jeff Park shared with Pompliano.
Debasement trade as the “dark matter of finance”
Bitwise chief investment officer Matt Hougan expressed his views on the debasement trade on Thursday, describing it as “the dark matter of finance. You can’t quite grasp it, yet it influences everything.”
Related: Bitcoin sees record inflows as investors pursue the ‘debasement trade’
“The recognition of the ‘debasement trade’ is accelerating for a straightforward reason: rising deficits, increasing debt, and accommodative policies that suppress real yields,” noted Onramp Bitcoin chief strategy officer, Brian Cubellis.
“Investors anticipating ongoing dilution seek a stable measure that won’t change, leading them to both gold and Bitcoin.”
More than just digital gold
Bitcoin transcends being mere digital gold, noted Enrique Ho, chief financial officer of Blink Wallet, on X.
“It is anti-debasement by design: with a fixed supply, transparent issuance, and trustless verification,” he added, stating it is “the purest form of capital preservation in a world where money itself is being revalued.”
“This encapsulates the debasement trade — and it will define the upcoming decade.”
Continued US dollar debasement
The debasement of the US dollar is visible in the US Dollar Index (DXY), which compares the greenback against a basket of currencies.
It has decreased by about 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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