Debasement Trade Is Here Thanks to Government Debt — And Bitcoin Will Benefit: Grayscale

According to reporting by Bitcoin Magazine, asset manager Grayscale's crypto research team stated that the debasement trade is benefiting bitcoin. Grayscale's head of research, Zach Pandl, wrote in a note that unchecked government debt growth undermines fiat currency credibility and drives investors toward alternative stores of value like physical gold and certain cryptocurrencies, primarily bitcoin.

US public debt has surpassed $40 trillion. Grayscale Research indicated that while the Treasury buys back bonds to ease borrowing costs, the core deficit remains, treating symptoms rather than structural deficits. The research note highlighted that the debasement trade involves investors purchasing assets to hedge against currency depreciation.

Following the U.S. Treasury's announcement regarding liquidity-support buyback operations, the dollar experienced its worst week of August and traded at a three-month low, while non-yielding assets benefited. Bitcoin traded for $77,493 on Friday afternoon in New York after reaching a high of $81,281 that week, marking a more than 20% jump over a 30-day period.