Gold and Bitcoin Will Jump Under ‘Debasement Trade’ Rule: JPMorgan

With Donald Trump newly elected as the next U.S. president, market sentiment is trending positive. Many experts now predict that Bitcoin could hit major new milestones by 2025. JPMorgan analysts are similarly optimistic about both Bitcoin and gold.

Led by managing director Nikolaos Panigirtzoglou, JPMorgan’s team has introduced the concept of the “debasement trade”—a strategy that benefits from currency weakening during inflationary times.

What Is the ‘Debasement Trade’?

The debasement trade is an investment strategy that thrives when currency values decline, often due to inflation or heavy government spending. In this strategy, investors choose assets like gold and Bitcoin, which are considered “stores of value” that hold or even increase in worth when currencies lose purchasing power.

In a recent report, JPMorgan analysts explained that the debasement trade “is likely to be reinforced by both tariffs and geopolitical tensions as well as an expansionary fiscal policy (‘debt debasement’).”

“We do not see the initial negative market reaction by gold as a rejection of the ‘debasement trade’ under a Trump win. After all, bitcoin, the other component of the ‘debasement trade’ rallied after the Trump win.”

After Trump’s win was confirmed on the day of the election results, Bitcoin surged to record a new all-time high of  $76,244. It is currently trading at $74,847. Notably, the analysts are positive on Bitcoin in 2025. 

Gold and Bitcoin Prices Are Expected to Rise

The analysts also emphasized that central bank decisions, particularly around gold purchases, will play a major role in shaping gold prices through 2025. Central banks increased their gold holdings significantly in 2022, especially following the Ukraine conflict and sanctions on Russia.

Although China’s central bank paused its gold acquisitions in April, ongoing global tensions may lead central banks, including the People’s Bank of China, to diversify more into gold and away from the U.S. dollar.

Since last summer, retail investors have been backing both Bitcoin and gold, pouring funds into exchange-traded funds (ETFs) linked to these assets. JPMorgan analysts expect this trend to carry into 2025, with Trump’s policies potentially boosting support for these investments.

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MicroStrategy’s Big Bitcoin Investment Plan

MicroStrategy has also revealed an ambitious plan that could further boost Bitcoin. The company aims to raise $42 billion over the next three years to invest in Bitcoin, with $21 billion from equity and another $21 billion from fixed-income securities. For 2025 alone, MicroStrategy has set a target of investing $10 billion in Bitcoin—nearly equal to its total Bitcoin purchases since mid-2020.

Trump’s victory has sparked a rally across stocks, cryptocurrencies, and even the U.S. dollar. Looking forward, the crypto industry anticipates that Trump’s administration may deliver on promises for regulatory easing, potentially establishing the U.S. as a leading hub for digital assets and blockchain innovation.