With Donald Trump securing the U.S. presidency, financial markets are poised to react, and according to analysts from JPMorgan, both gold and bitcoin are expected to emerge as significant beneficiaries. These assets are becoming central to what the analysts call the “debasement trade,” an investment strategy designed to protect against the devaluation of fiat currencies, especially due to inflation or expansive fiscal policies.
The core idea behind the debasement trade is that when governments implement policies that weaken the national currency, asset classes such as gold and bitcoin, which are perceived as stores of value, naturally become attractive alternatives. These assets tend to perform well during periods of economic uncertainty and inflation because they maintain their intrinsic value even as the purchasing power of fiat money declines. The analysts, led by Nikolaos Panigirtzoglou, emphasized in a Wednesday report that this trade is likely to be strengthened not only by Trump’s policies, such as tariffs and global tensions, but also by the anticipated expansionary fiscal measures often referred to as “debt debasement.”
The immediate aftermath of Trump’s victory presented an intriguing dynamic. While gold initially experienced a negative market reaction, JPMorgan’s analysts were quick to highlight that this should not be interpreted as a rejection of the debasement trade. In fact, a closer look at market movements reveals that bitcoin has rallied sharply in the same timeframe, reinforcing the concept. Bitcoin, the world’s leading cryptocurrency, surged to a record high of $76,244 on November 6th, the day Trump’s win was confirmed, although it has settled slightly lower, trading at around $75,100 as of recent data, as reported by The Block’s Bitcoin price page.
When pressed for a long-term projection, particularly regarding bitcoin’s trajectory into 2025, Panigirtzoglou stopped short of offering a concrete price target but remained optimistic. “We are positive on bitcoin into 2025,” he told The Block, indicating strong confidence in the cryptocurrency’s future, though details on specific forecasts were withheld.
Gold and bitcoin are widely expected to see notable upward movement over the next several years. According to JPMorgan, one critical factor in determining gold’s path through to 2025 will be the behavior of central banks, particularly their rate of gold purchases. In 2022, central banks increased their gold holdings significantly, largely prompted by the geopolitical upheaval following Russia’s invasion of Ukraine and the subsequent sanctions imposed on Moscow. For instance, China’s central bank, the People’s Bank of China (PBoC), curtailed its gold-buying efforts after April that year, but the analysts predict that current geopolitical uncertainties and escalating tariffs will revive these efforts. Central banks, likely including the PBoC, may diversify away from their reliance on U.S. dollar-denominated reserves and pivot more strongly towards gold.
The role of retail investors cannot be ignored in this unfolding scenario. Broad-based interest in gold and bitcoin has been evident among everyday investors, with gold and bitcoin ETFs seeing substantial inflows since last summer. JPMorgan suggests that this trend will not be a short-term phenomenon but rather a continued movement going into 2025. This sentiment might be further reinforced by Trump’s policies, which appear aligned with broader market shifts favoring gold and bitcoin.
Moreover, the future of bitcoin could receive a significant boost from corporate interest, particularly from MicroStrategy, a company that has been a notable proponent of bitcoin. As JPMorgan underscores, MicroStrategy has drawn out an ambitious plan, labeled the “21/21 plan,” to acquire even more bitcoin, underscoring its credibility in the space. The plan envisions the firm raising a staggering $42 billion in capital over the coming three years, splitting this amount evenly between equity and fixed-income securities. A remarkable $10 billion outlay for bitcoin is earmarked solely for 2025, an amount that is comparable to the company’s total bitcoin investments since it began accumulating the cryptocurrency in mid-2020, signaling an aggressive purchasing strategy moving forward.
This demonstrated commitment from MicroStrategy could further cement bitcoin’s place in institutional portfolios and provide another lift to its valuation, potentially alongside broader retail and institutional demand. Intriguingly, the analysts behind JPMorgan’s research didn’t just project bitcoin’s future, but also suggested how MicroStrategy’s overall debt structure might evolve alongside its bitcoin acquisitions over the coming years.
In summary, as global economic and political landscapes shift under the influence of new leadership and ongoing geopolitical crises, investors are increasingly looking to hedge against the debasement of fiat currencies. Gold, with its long-held reputation as a safe haven, and bitcoin, with its growing status as digital gold, are emerging as top candidates in this strategy. Whether driven by central banks diversifying their reserves or retail and institutional players anticipating future price upticks, these assets appear to be on a path to substantial value appreciation through 2025.
