Investors have flocked to safe-haven assets amid rising inflation concerns and uncertainty over the Federal Reserve’s independence. JPMorgan analysts have dubbed this shift the “debasement trade.”

Longtime Bitcoin critic Peter Schiff reiterated that gold remains the true store of value. Schiff said, “Bitcoin follows other risk assets… it is not a safe-haven store of value like gold. The world is moving from the dollar back to gold.”

Bitcoin: Safe Haven or Risk Asset?

BTC sharp decline coincided with rising global tensions. Trade disputes between China and the U.S., coupled with growing U.S. fiscal deficits, are rattling investors. According to JPMorgan, the macroeconomic environment remains favorable for debasement hedge strategies, with high inflation, mounting debt, and geopolitical uncertainty pressuring fiat systems.

Over the past week, Bitcoin fell 8% while gold gained nearly 6%, casting doubt on BTC’s safe-haven credentials. Users on X commented, “Debasement trade feels more like a meme now,” noting Bitcoin’s growing correlation with tech stocks rather than traditional inflation hedges.

Gold and Bitcoin: Is the Debasement Trade Still Relevant?

BTC proponents argue that gold and Bitcoin can complement each other as long-term stores of value against fiat risk. Paolo Ardoino, CEO of Tether, wrote on X, “Bitcoin and gold will outlast all other currencies.” On-chain data also shows increasing BTC-gold correlation, indicating that investors continue to hold both assets side by side in portfolios.

However, critics like Schiff warn that institutional inflows into Bitcoin ETFs could revert back to gold. He also cautioned that companies holding Bitcoin on their balance sheets might be forced to sell during downturns, adding further price pressure.

The Future of the Debasement Trade

As demand for non-fiat assets rises, investors’ time horizons and risk tolerance determine which asset they prefer. Gold benefits from centuries of trust and institutional legitimacy, while BTC offers digital portability and fixed supply but remains volatile and sentiment-driven.

• Gold: Safe haven, institutional trust, record prices

• Bitcoin: Digital portability, fixed supply, high volatility

• Debasement Trade: Long-term hedge strategy against inflation and fiat risk

This divergence between gold and Bitcoin forces investors to reconsider strategic decisions. Despite short-term volatility, the debasement trade debate remains relevant for long-term hedging strategies.

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Trump Says Bitcoin Is Good for the Economy

Speaking at a White House press conference, Trump emphasized that the growing Bitcoin industry brings undeniable economic benefits. “It’s become amazing,” he said. “It’s the jobs that it produces, and I notice more and more you pay in Bitcoin. People are saying it takes a lot of pressure off the dollar, and it is a great thing for our country.”

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Analysts suggest that Trump may have been alluding to the Triffin Dilemma — the conflict between the short-term domestic goals and the long-term global role of the dollar as the world’s reserve currency.

National Debt, Inflation, and the Bitcoin Hedge

Trump previously floated the idea of paying off the national debt using Bitcoin, highlighting its capped supply in contrast to the inflationary dollar. However, critics argue that even owning all the Bitcoin in circulation would not be enough to offset the U.S.’s $37 trillion debt.

The Federal Reserve’s M2 money supply continues to rise, increasing inflation risk and eroding the dollar’s purchasing power. Meanwhile, the U.S. Dollar Index (DXY) has fallen to a three-year low, reflecting diminishing investor confidence in the dollar’s stability.

“Nothing Stops This Train”

Macroeconomist and Bitcoin advocate Lyn Alden has coined the phrase “nothing stops this train,” referring to the inevitable continuation of money printing by global governments — a process that only strengthens the case for decentralized, limited-supply digital assets like Bitcoin.

Trump’s comments may signal a shift in how the U.S. government views cryptocurrencies — not as a threat, but as a strategic economic asset.

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Bitcoin Offers A Shield Against Oppression

Speaking at the Bitcoin Policy Summit in Washington, D.C., Human Rights Foundation’s Chief Strategy Officer Alex Gladstein declared that Bitcoin is a major threat to authoritarian control. “Bitcoin is bad for dictators,” he emphasized, explaining how its decentralized nature prevents regimes from manipulating people financially.

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He pointed out that when used correctly, Bitcoin allows individuals to remain anonymous and evade state surveillance. “If they don’t link their ID to it, governments can’t track them,” he noted.

No Freezing, No Deleting, No Hyperinflation

Gladstein argued that those who control their own wallets are immune to many authoritarian tactics. “Governments can’t freeze your funds, they can’t delete your assets, and most importantly, they can’t hyperinflate you,” he said. In countries where inflation runs rampant, Bitcoin serves as a valuable hedge.

The HRF’s first real-world experiment with Bitcoin dates back to 2013, during Ukraine’s pro-democracy protests. Protesters, who had their bank accounts frozen, used Bitcoin to support their cause. “We were skeptical at first — Bitcoin was just $100 back then — but it worked,” he recalled.

Now, Gladstein says, the technology is proving invaluable for people living under authoritarian rule around the globe, providing financial autonomy and protection from state overreach.

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CPI Figures Fall Below Expectations

According to data released on May 13, US Core CPI (MoM) came in at 0.2%, below the expected 0.3%. Headline CPI (MoM) also recorded 0.2%, again below the 0.3% forecast. On an annual basis, CPI (YoY) was reported at 2.3%, slightly under the previous and expected value of 2.4%.

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These results suggest a controlled deceleration in inflation, potentially reducing the pressure on the Federal Reserve to maintain a hawkish stance.

Bitcoin And Ethereum React Quickly

Immediately after the release, Bitcoin rose from 103,300$ to 104,000$, while Ethereum (ETH) climbed from 2,500$ to 2,530$. The market’s swift reaction underscores how closely crypto assets are tied to macroeconomic expectations, particularly around interest rate policy.

The move also reinforces the narrative of Bitcoin and Ethereum being viewed as hedges against inflation.

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Keiser stated:

“Russia, China, and Iran are not going to accept a US dollar stablecoin. I predict they will counter the USD stablecoin with a gold-backed one. China and Russia have a combined 50,000 tonnes of gold — far more than what’s officially reported.”

Gold vs. USD Stablecoins on the Global Stage

Keiser warns that US lawmakers’ plans to extend US dollar dominance through dollar-backed stablecoins are threatened by the potential rise of gold-backed stablecoins.

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In June 2024, stablecoin issuer Tether launched Alloy (aUSD₮), a gold-backed stablecoin collateralized by Tether’s XAU₮ — a token offering a paper claim to physical gold.

PointsVille founder and former VanEck executive Gabor Gurbacs said:

“Tether Gold is what the US dollar used to be before 1971. XAU₮ is up 15.7% year-to-date, while the broader crypto market is in decline. Foundations and businesses should hedge their holdings with XAU₮.”

The US Strategy for Dollar-Pegged Stablecoins

US Treasury Secretary Scott Bessent stated that the Trump administration will focus on leveraging USD stablecoins to protect the dollar’s reserve currency status and maintain global financial dominance.

Speaking at the March 7 White House Crypto Summit, Bessent emphasized that establishing a stablecoin regime is a top priority for the administration. Federal Reserve Governor Christopher Waller also expressed support for using stablecoins to strengthen the dollar’s position before Bessent’s comments.

US lawmakers have introduced several bills aimed at establishing a comprehensive regulatory framework for stablecoins, including the Stable Act of 2025 and the GENIUS Stablecoin Bill.

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