The so-called debasement trade was the hottest trade of 2025. But while gold finished on a high, Bitcoin ended the year in the red.
The “debasement trade” — when investors buy an asset as a way to hedge against a currency losing value — included Bitcoin last year as it is an international asset with a fixed supply.
All seemed well for crypto investors as Bitcoin notched high after high — along with precious metals — throughout the year. Then, the last quarter of 2025 came, investors ran out of steam and a brutal crypto wipeout caused the coin to plunge in price.
But while some are puzzled that Bitcoin is down from its October all-time high of $126,080 by nearly 30%, experts told DL News that the trade still has room to run.
Long-term outlook
The debasement trade is a long-term strategy that requires “a lot of patience”, Senior ETF analyst at Bloomberg, Eric Balchunas, said, and investors shouldn’t be dismayed when the orange coin doesn’t rocket immediately.
“The debasement trade is a trade that’s a lot more long-term,” he told DL News. “Every year, there are more deficits and quantitative easing, and the money supply grows. It’s still very much in play — I think this year we’re going to see a lot of debt and a lot of liquidity.”
He added that while the debasement trade is alive and well, it doesn’t always align with the daily news.
Currency debasement isn’t going anywhere
Crypto market observers have long said that an increased money supply and government debt benefits Bitcoin because you can’t print more of it. Like gold — and other precious metals — it’s scarce, which is its appeal when fiat money starts to lose its value.
Bitcoin has typically performed well in a low-interest rate environment, but the Federal Reserve didn’t slash interest rates as aggressively as investors may have hoped.
Dilin Wu, research analyst at forex broker Pepperstone, told DL News that while Bitcoin dipped at the end of last year, “concerns over currency debasement haven’t disappeared — they’ve just been temporarily subdued.”
And since the January 2024 approval of spot Bitcoin exchange-traded funds in the US, more serious investors have bought exposure to the cryptocurrency.
“Bitcoin is increasingly seen as a hedge against long-term fiat erosion, not just a marginal speculative asset,” she said, adding that demand for the coin “is becoming more institutional and structured, rather than purely speculative.”
All’s in place for a bullish 2026
It’s now expected that pro-crypto President Trump will choose a dovish Federal Reserve chair this month. The Republican last year sharply criticised Fed Chair Jerome Powell for not lowering interest rates quickly enough.
“Trump is going to appoint a dovish Fed chairman to expand the fiscal deficit to support military and housing markets,” Director of Derivatives at Amberdata Greg Magadini told DL News.
“There’s a strong likelihood the fiscal doves in the White House ‘run it hot’ to pump markets into the midterms. The debasement trade is 100% in play in 2026 and this will have a stellar impact,” he added.
