Bitcoin News Today: Institutions Bet Big on Bitcoin's Debasement Hedge-Gold's Rally Divides Analysts

Bitcoin's recent surge to an all-time high of $126,200 has reignited interest in its role as a hedge against currency devaluation, with analysts and institutional investors increasingly framing the move as part of a broader "debasement trade" narrative. Global crypto exchange-traded product (ETP) inflows hit a record $5.67 billion in the week ending October 9, 2025, driven by institutional demand and concerns over fiscal and geopolitical risks. Bitwise's research highlights that weakening fiat confidence and rising macroeconomic uncertainty are fueling demand for store-of-value assets like Bitcoin and gold, with the U.S. Dollar Index (DXY) down 10% year-to-date while gold surged 50% compared to Bitcoin's 27% gain .

JPMorgan analysts argue that Bitcoin is undervalued relative to gold on a volatility-adjusted basis, estimating a 42% upside potential to $165,000. The bank's volatility ratio analysis suggests Bitcoin currently consumes 1.85 times more risk capital than gold, implying a significant price gap if the debasement trade continues. This valuation gap has shifted from Bitcoin being $36,000 overvalued at the end of 2024 to $46,000 undervalued today, reflecting growing institutional and retail adoption of Bitcoin and gold ETFs . Retail investors have been the primary drivers of this trend, with spot Bitcoin ETFs attracting $3.49 billion in inflows, outpacing gold ETFs earlier in the year but narrowing as gold's rally accelerated .

The debate over Bitcoin's effectiveness as a debasement hedge remains contentious. Proponents like Frank Hepworth of Yieldschool and Lucas Kiely of Future Digital Capital Management argue Bitcoin's fixed supply and algorithmic scarcity make it a superior store of value compared to fiat. They cite its $2.4 trillion market cap and structural resistance to inflation as evidence of its role in a world of expanding monetary supply. However, critics such as Tomas Fanta of Heartcore note that Bitcoin has not yet exhibited the same hedging tendencies as gold, with equities and gold outperforming crypto in recent dollar devaluation scenarios. Fanta attributes Bitcoin's growth to regulatory clarity and ETF accessibility rather than direct demand as a currency hedge .

Institutional participation has further amplified Bitcoin's appeal. BlackRock's iShares Bitcoin Trust (IBIT) alone accounted for $4.1 billion of recent inflows, managing over 800,000 BTC valued at nearly $100 billion. On-chain data reveals over 49,000 BTC withdrawn from exchanges by whale entities, signaling long-term accumulation. Meanwhile, positive spot buying and moderate leverage suggest a sustainable rally rather than euphoric speculation . JPMorgan's Nikolaos Panigirtzoglou emphasizes that while institutional activity via CME futures has lagged ETF flows, the trend reflects a broader shift in capital toward hard assets as central banks expand liquidity and deficits grow .

The debasement trade's macroeconomic underpinnings remain robust. Paul Tudor Jones and other macro investors highlight U.S. fiscal fragility, with annual interest costs exceeding $1 trillion and real yields declining, as tailwinds for Bitcoin. Julius Baer's analysis underscores that both gold and Bitcoin serve as hedges against systemic risks and inflation, though their roles differ: gold excels during equity market corrections, while Bitcoin acts as a counterweight to bond market stress. This distinction aligns with historical data showing gold's safe-haven status during stock sell-offs and Bitcoin's resilience amid Treasury sell-offs .

Despite bullish projections, risks persist. Retail participation in Bitcoin has waned since spring 2024, with small transaction volumes declining even as prices rise, suggesting a market still dominated by institutions. Additionally, Bitcoin's correlation with equities has strengthened due to ETF-driven inflows, reducing its "purity" as a bond hedge. Experts caution that regulatory shocks or macroeconomic shifts could disrupt the current trend, though the structural case for Bitcoin as a debasement hedge remains intact .

Source: [1] Cointelegraph (https://cointelegraph.com/news/bitcoin-leads-record-breaking-inflows-as-investors-chase-the-debasement-trade) [2] Decrypt (https://decrypt.co/343620/what-the-debasement-trade-means-for-bitcoin) [3] The Block (https://www.theblock.co/post/373241/jpmorgan-bitcoin-price-165000-debasement-trade) [4] Coindesk (https://www.coindesk.com/markets/2025/10/02/bitcoin-could-reach-usd165k-based-on-gold-s-record-run-jpmorgan) [7] Julius Baer (https://www.juliusbaer.com/en/insights/market-insights/markets-explained/gold-vs-bitcoin-which-is-the-better-hedge/)