{"id":54499,"date":"2026-08-28T15:45:06","date_gmt":"2026-08-28T20:45:06","guid":{"rendered":"https:\/\/bitcoinmagazine.com\/?p=54499"},"modified":"2026-08-28T15:45:23","modified_gmt":"2026-08-28T20:45:23","slug":"debasement-trade-to-benefit-bitcoin","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/news\/debasement-trade-to-benefit-bitcoin","title":{"rendered":"Debasement Trade Is Here Thanks to Government Debt \u2014 And Bitcoin Will Benefit: Grayscale"},"content":{"rendered":"<div id=\"bsf_rt_marker\"><\/div>\n<p class=\"wp-block-paragraph\">The debasement trade is back \u2014 and will benefit bitcoin.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That&#8217;s according to asset manager Grayscale&#8217;s crypto research team, who wrote in a note this week that the U.S. government debasing its currency would lead to cash hitting digital assets.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&#8220;Unchecked government debt growth undermines the credibility of fiat currencies and drives investors to seek out alternative stores of value like physical gold and certain cryptocurrencies,&#8221; the note by the firm\u2019s head of research, Zach Pandl, read, adding that primarily bitcoin would benefit.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-x wp-block-embed-x\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">US public debt has reached over $40 trillion. The Treasury is buying back bonds to ease rising borrowing costs, but core deficit remains. <br> <br>Grayscale Research believes this may drive investors towards the debasement trade: Bitcoin <a href=\"https:\/\/x.com\/search?q=%24BTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$BTC<\/a>, Ethereum <a href=\"https:\/\/x.com\/search?q=%24ETH&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$ETH<\/a>, and Zcash <a href=\"https:\/\/x.com\/search?q=%24ZEC&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$ZEC<\/a>.<br> <br>Read more\u2026 <a href=\"https:\/\/t.co\/tN3xgaNZ1l\">pic.twitter.com\/tN3xgaNZ1l<\/a><\/p>&mdash; Grayscale (@Grayscale) <a href=\"https:\/\/x.com\/Grayscale\/status\/2093358354169299379?ref_src=twsrc%5Etfw\">August 28, 2026<\/a><\/blockquote><script async src=\"https:\/\/platform.x.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">The so-called debasement trade is when investors buy an asset as a way to hedge against a currency losing value. The trade was hot last year, and helped bitcoin&#8217;s run, but the digital asset&#8217;s run lost steam after October as traders turned their attention to stocks related to artificial intelligence.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But since last week, bitcoin has benefited from <a href=\"https:\/\/bitcoinmagazine.com\/news\/bitcoin-blasts-past-68000\">news<\/a> that the U.S. Treasury would at least double the size of its liquidity-support buyback operations. The announcement last week hurt the dollar but non-yielding assets have benefited.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&#8220;That buybacks are needed at all is the problem: heavy growth in government debt is driving up the cost of borrowing,&#8221; the note continued. &#8220;The Treasury is treating the symptoms (rising bond yields) because they cannot cure the disease (structural deficits).&#8221;&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The note added that on the same day last week as the buyback announcement, the Treasury also said the U.S. public debt exceeded $40 trillion for the first time.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As debt and interest payments grow, the government needs to either raise taxes, cut spending, or issue more debt.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Bitcoiners see the more politically likely path as expanding the dollar supply \u2014 which is ultimately bad for the dollar, and good for scarce assets like bitcoin.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">After bitcoin started surging last week, the dollar had its worst week of August and was trading at a <a href=\"https:\/\/www.bloomberg.com\/news\/newsletters\/2026-08-21\/us-playing-with-fire-with-debt-plan-evening-briefing-americas\" target=\"_blank\" rel=\"noopener\">three-month low<\/a>.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Bitcoin was <a href=\"https:\/\/bitcoinmagazine.com\/bitcoin-price\">trading<\/a> for $77,493 on Friday afternoon in New York after hitting a high this week of $81,281. Over a 24-hour period, the coin now sits unmoved, but over a 30-day period, it has jumped by more than 20%.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The so-called debasement trade is benefiting bitcoin, the asset manager&#8217;s research team has said. <\/p>\n","protected":false},"author":3860,"featured_media":54500,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4378],"tags":[76,6725,5834,294],"class_list":["post-54499","post","type-post","status-publish","format-standard","has-post-thumbnail","category-news","tag-bitcoin","tag-debasement","tag-dollar","tag-grayscale"],"author_data":{"id":3860,"name":"Mathew Di Salvo","nicename":"mathewdisalvo","avatar_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2026\/07\/cropped-Mathew-Di-Salvo-scaled-1.jpeg"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2026\/08\/Debasement-Trade-Is-Here-Thanks-to-Government-Debt.jpg","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/54499","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/3860"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=54499"}],"version-history":[{"count":1,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/54499\/revisions"}],"predecessor-version":[{"id":54502,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/54499\/revisions\/54502"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/54500"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=54499"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=54499"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=54499"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}