Bitcoin News Today: Investors Flee Dollar for Bitcoin and Gold as U.S. Debt Spiral Sparks Trust Crisis

Financial institutions are increasingly embracing the "debasement trade," a strategic shift where investors allocate capital to Bitcoin and gold as hedges against the weakening U.S. dollar and rising fiscal risks. This trend, highlighted by Citadel CEO Ken Griffin and other industry experts, reflects growing concerns over persistent inflation, U.S. debt accumulation, and the erosion of trust in traditional monetary systems. Gold prices have surged past $3,900 per ounce, while Bitcoin has reached record highs exceeding $125,000, signaling a profound reallocation of assets away from fiat currencies.

The U.S. dollar's depreciation has accelerated in 2025, with a year-to-date decline of approximately 10%, marking its worst six-month performance in 50 years. This decline coincides with inflation remaining "substantially above target" and U.S. public debt surpassing $35 trillion. Citadel's Griffin has described the U.S. economy as being on a "sugar high," sustained by stimulus measures that drive asset inflation without commensurate economic growth. The shift is not limited to retail investors; institutional players, including central banks, are also diversifying reserves into gold and exploring Bitcoin's potential as a non-sovereign store of value.

The debasement trade has created winners and losers across industries. Gold mining firms like Newmont Corporation and Barrick Gold Corporation have benefited from soaring prices, while cryptocurrency exchanges such as Coinbase and MicroStrategy see revenue growth tied to Bitcoin's appreciation. Conversely, traditional financial institutions face challenges as demand for U.S. dollars wanes, impacting transaction fees and deposit bases. However, many banks are adapting by launching Bitcoin ETFs and integrating digital assets into their offerings.

Ray Dalio, founder of Bridgewater Associates, has updated his investment recommendations, advising a 15% portfolio allocation to Bitcoin or gold-a significant increase from his previous 1–2% stance. Dalio attributes this shift to the U.S. national debt exceeding $36.7 trillion and projected Treasury issuance of $12 trillion in 2025, which he views as a "debt doom loop." While he favors gold over Bitcoin due to concerns about blockchain transparency and surveillance, he acknowledges both assets as effective diversifiers against currency devaluation. His comments align with broader market trends, as ETF inflows into gold and Bitcoin have surged, driven by both retail and institutional investors.

Gold's dominance in 2025 has outpaced Bitcoin's performance, with the precious metal posting nearly 47% gains year-to-date. Central bank demand, particularly from emerging markets, has been a key driver, with reserves in gold reaching a 24% share of foreign exchange reserves by Q2 2025. The Federal Reserve's rate-cut expectations have further bolstered gold's appeal, as lower real yields reduce the opportunity cost of holding non-yielding assets. Meanwhile, Bitcoin's volatility and regulatory uncertainties have limited its adoption in institutional portfolios compared to gold's entrenched role as a safe haven.

The implications of this shift extend beyond asset prices. A sustained de-dollarization trend could weaken the U.S. dollar's global dominance, reducing the "exorbitant privilege" that allows the U.S. to finance deficits at low costs. This could lead to higher borrowing costs, exacerbating the national debt crisis and increasing inflationary pressures. Geopolitical realignments, such as the growing influence of BRICS nations and alternative trade currencies like the yuan, further challenge the dollar's primacy.

Regulatory clarity remains critical for Bitcoin's integration into mainstream finance. While central banks are cautiously diversifying reserves into gold, some analysts predict Bitcoin could appear on central bank balance sheets by 2030, provided volatility is managed through maturing regulatory frameworks. For now, the debate between gold and Bitcoin as "digital gold" continues, with gold maintaining a stronger institutional trust due to its historical stability and regulatory acceptance.

As the U.S. faces fiscal and geopolitical headwinds, the debasement trade underscores a redefinition of trust in global finance. Investors are prioritizing scarce, non-sovereign assets to hedge against monetary debasement, reshaping capital allocation strategies and challenging the dollar's century-long hegemony. The path forward will depend on fiscal discipline, policy clarity, and the ability of financial institutions to adapt to a multipolar monetary landscape.

Source: [1] MarketMinute - 2025-10-7 Investors Flee US Dollar for Bitcoin and Gold Amidst Debasement Trade Warnings from Citadel CEO Ken Griffin (https://markets.financialcontent.com/stocks/article/marketminute-2025-10-7-investors-flee-us-dollar-for-bitcoin-and-gold-amidst-debasement-trade-warnings-from-citadel-ceo-ken-griffin)

[2] Fool.com.au - 2025-10-06 Bitcoin and Gold Surge to Record Highs as Investors Pile Into the Debasement Trade (https://www.fool.com.au/2025/10/06/bitcoin-and-gold-surge-to-record-highs-as-investors-pile-into-the-debasement-trade/)

[4] Coindesk - 2025-07-29 Billionaire Ray Dalio Backs 15% Allocation to Bitcoin and Gold Amid U.S. Debt Spiral (https://www.coindesk.com/markets/2025/07/29/billionaire-ray-dalio-backs-15-allocation-to-bitcoin-and-gold-amid-u-s-debt-spiral)

[8] AnalyticsInsight - 2025 Why Is Gold Beating Bitcoin in 2025 (https://www.analyticsinsight.net/bitcoin/why-is-gold-beating-bitcoin-in-2025)