Wall Street Is Looking For New Ways to Play the Debasement Trade. Here's Why That's Bullish for Bitcoin.

In investment circles, over the last few years, there has been talk of the "debasement trade" -- investment opportunities that could do well if the U.S. government prints more money and allows inflation to run high. The conversation ebbs and flows depending on the latest run of economic data, and, in early September, it's back in vogue after a few quarters of quietude.

That's bullish for traditional inflation-hedge assets like gold, but at least in the thinking of some investors on Wall Street, there's enough demand for those inflation-resistant assets to also benefit newer contenders in the category, like Bitcoin (CRYPTO: BTC). Here's why.

Bitcoin's correlation with gold is now above 70%

The trigger for the debasement trade's latest revival was Treasury Secretary Scott Bessent announcing on Aug. 19 that the government would expand its purchases of long-dated bonds, effective Sept. 9.

By buying more bonds back, the government is artificially attempting to keep bond yields lower, which tends to make the market believe that the risk of currency debasement is rising rather than falling. Bitcoin is up 22% since Bessent's announcement, while gold, as measured by the SPDR Gold Shares ETF (NYSEMKT: GLD), is down 2%, suggesting it isn't seeing the same upside amid rising inflation expectations, despite its prior strong performance in that role.

What's more, Grayscale reported on Aug. 27 that Bitcoin's 90-day correlation with gold's price had risen above 50%, up from near zero in January; as of Sept. 9, the correlation has risen even further to around 74%. This supports the hypothesis that investors are beginning to view Bitcoin as a scarce store-of-value asset.

It also has positive implications for its price, especially if financial institutions adopt that same perspective.

Would debasement actually create new demand for Bitcoin?

The advantage of Bitcoin as an inflation-resistant asset is that its supply is limited to a maximum of 21 million BTC, which will never be created, and no government can print more of it. In an environment of rapid currency debasement, which is unlikely to occur with the dollar within the next few years, Bitcoin is also convenient for purchasing large sums of fleeing capital, as it's a massive market with no international boundaries.

But institutional investors tend to take a conservative approach to adopting new technologies and classes of assets, and Bitcoin is, on some level, both. So the burden of proof for it to stand by itself in a portfolio that's intended to survive currency debasement is likely too high to clear.

Therefore, one new answer to the issue of debasement is to bundle tried-and-tested solutions, like gold and commodities businesses, with newer approaches, like Bitcoin.

Bitwise Asset Management launched an exchange-traded fund (ETF) in late January 2026 that claims to hedge specifically against currency debasement, and it holds at least 25% in spot gold, alongside both Bitcoin and mining stocks. Similarly, on Aug. 26, MicroBit listed Hong Kong's first ETF holding both Bitcoin and gold.

Given what the institutions are doing and the real risk of inflation at the moment, if you don't own any gold or Bitcoin, it's probably a good idea to buy at least a little of each.

Alex Carchidi has positions in Bitcoin and SPDR Gold Shares. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.