Bitcoin belongs in the debasement trade — despite dropping $10,000 in the same week gold topped a fresh price record. That’s according to analysts who say last week’s brutal sell off, which wiped out around $19 billion in leveraged positions from the broader crypto market, was driven by technical factors rather than a fundamental breakdown in Bitcoin’s store-of-value thesis. “The crash on Friday was mostly due to technical reasons related to leverage in perps markets, so nothing has fundamentally changed in the thesis for Bitcoin as a store of value,” Carlos Guzmán, analyst at research firm GSR, told DL News. “Bitcoin still qualifies for the debasement trade.”Last week’s crash came as investors fled risk assets following US President Donald Trump’s latest tariff threats. Meanwhile, gold stormed past $4,200 per ounce, up over 50% year-to-date. The precious metal’s performance has raised questions about whether Bitcoin truly belongs in the same conversation as gold when it comes to hedging against government dysfunction and macro uncertainty. Debasement tradeJPMorgan analysts coined the debasement trade as a bet against governments’ ability to manage their finances. Basically, investors pull away from sovereign debt and fiat currencies, fearful their value will erode as governments address massive debt burdens by simply printing more money. But concerns have compounded in recent months.In the US, Trump’s assault on Federal Reserve independence have sown doubts about whether Treasuries will continue to enjoy their status as the world’s main risk-free asset. And this marks the second week of a government shutdown that has stymied the release of key economic data. In this environment, gold has been the clear winner.Even Jamie Dimon, JPMorgan Chase CEO and a historic gold bear, has said it is “semi-rational” to hold some of the yellow metal. Perception problemFor Guzman, however, Bitcoin’s latest crash may tarnish its reputation as a hedge against inflation.“Bitcoin has been in this awkward position where its main value proposition is as a store of value and protection against debasement, but it tends to trade with tech stocks instead of gold,” he told DL News. “Last Friday’s crash may be viewed as lending support to the latter view.”But Guzman sees this as temporary. “As the market matures and a greater proportion of Bitcoin trades in large, regulated, onshore venues, crypto-native liquidation cascades will have less impact,” he said. Undershooting supplyAndré Dragosch, European head of research at Bitwise, expects Bitcoin to catch up to gold’s performance in the coming months. “There is increasing performance asymmetry in favour of Bitcoin,” he said. Dragosch reckons three factors should drive Bitcoin higher: Bitcoin’s historical relationship with global money supply reasserting itself, improving global growth expectations due to accelerating liquidity, and the relative performance between Bitcoin and gold appearing oversold by more than two standard deviations. Although Dragosch suggests investors shouldn’t use global money supply to predict Bitcoin price, there has been a long-running relationship between the two. “Bitcoin has been undershooting global money supply, but I think that the long-run relationship between Bitcoin and global money supply will reassert itself,” Dragosch told DL News. “The moment you see a renewed risk on, Bitcoin should outperform gold again, which I am expecting into a seasonally strong Q4.”For now, Bitcoin remains caught between two identities: the digital gold narrative that believers have been promoting, and the reality of a volatile asset still prone to violent selloffs. Pedro Solimano is DL News’ Buenos Aires-based markets correspondent. Got a tip? Email him at [email protected].Bitcoin belongs in the debasement trade — despite dropping $10,000 in the same week gold topped a fresh price record. That’s according to analysts who say last week’s brutal sell off, which wiped out around $19 billion in leveraged positions from the broader crypto market, was driven by technical factors rather than a fundamental breakdown in Bitcoin’s store-of-value thesis. “The crash on Friday was mostly due to technical reasons related to leverage in perps markets, so nothing has fundamentally changed in the thesis for Bitcoin as a store of value,” Carlos Guzmán, analyst at research firm GSR, told DL News. “Bitcoin still qualifies for the debasement trade.”Last week’s crash came as investors fled risk assets following US President Donald Trump’s latest tariff threats. Meanwhile, gold stormed past $4,200 per ounce, up over 50% year-to-date. The precious metal’s performance has raised questions about whether Bitcoin truly belongs in the same conversation as gold when it comes to hedging against government dysfunction and macro uncertainty. Debasement tradeJPMorgan analysts coined the debasement trade as a bet against governments’ ability to manage their finances. Basically, investors pull away from sovereign debt and fiat currencies, fearful their value will erode as governments address massive debt burdens by simply printing more money. But concerns have compounded in recent months.In the US, Trump’s assault on Federal Reserve independence have sown doubts about whether Treasuries will continue to enjoy their status as the world’s main risk-free asset. And this marks the second week of a government shutdown that has stymied the release of key economic data. In this environment, gold has been the clear winner.Even Jamie Dimon, JPMorgan Chase CEO and a historic gold bear, has said it is “semi-rational” to hold some of the yellow metal. Perception problemFor Guzman, however, Bitcoin’s latest crash may tarnish its reputation as a hedge against inflation.“Bitcoin has been in this awkward position where its main value proposition is as a store of value and protection against debasement, but it tends to trade with tech stocks instead of gold,” he told DL News. “Last Friday’s crash may be viewed as lending support to the latter view.”But Guzman sees this as temporary. “As the market matures and a greater proportion of Bitcoin trades in large, regulated, onshore venues, crypto-native liquidation cascades will have less impact,” he said. Undershooting supplyAndré Dragosch, European head of research at Bitwise, expects Bitcoin to catch up to gold’s performance in the coming months. “There is increasing performance asymmetry in favour of Bitcoin,” he said. Dragosch reckons three factors should drive Bitcoin higher: Bitcoin’s historical relationship with global money supply reasserting itself, improving global growth expectations due to accelerating liquidity, and the relative performance between Bitcoin and gold appearing oversold by more than two standard deviations. Although Dragosch suggests investors shouldn’t use global money supply to predict Bitcoin price, there has been a long-running relationship between the two. “Bitcoin has been undershooting global money supply, but I think that the long-run relationship between Bitcoin and global money supply will reassert itself,” Dragosch told DL News. “The moment you see a renewed risk on, Bitcoin should outperform gold again, which I am expecting into a seasonally strong Q4.”For now, Bitcoin remains caught between two identities: the digital gold narrative that believers have been promoting, and the reality of a volatile asset still prone to violent selloffs. Pedro Solimano is DL News’ Buenos Aires-based markets correspondent. Got a tip? Email him at [email protected].