How one of 2025’s most popular trades is boosting gold and bitcoin — and may keep going during the government shutdown

Core Viewpoint - The current government shutdown has intensified the "debasement trade," where investors are diversifying away from fiat currencies like the U.S. dollar, favoring assets such as gold and bitcoin due to concerns over inflation and fiscal policy [2][5][6]. Group 1: Market Trends - Gold for December delivery reached a record high of $3,908.90 per ounce, marking the 41st record-high settlement of the year [3]. - Bitcoin briefly surpassed $125,000, achieving a new all-time high [3]. - The ICE U.S. Dollar Index has decreased by approximately 10% this year, reflecting a decline in the dollar's value [3]. Group 2: Investor Behavior - Individual investors have increasingly embraced the debasement trade, with significant flows into gold and bitcoin ETFs noted, particularly since the government shutdown began [6][7]. - Institutional investors are also participating, buying both bitcoin and gold futures since 2024, indicating a broader acceptance of this trading theme [7]. Group 3: Economic Factors - Persistent high deficits and rising government debt are contributing to the momentum of the debasement trade, as these factors create uncertainty regarding the U.S. dollar's long-term value [6][12]. - Analysts suggest that the political dysfunction and high federal deficits are likely to continue, further supporting the attractiveness of gold and bitcoin as alternative investments [6][12]. Group 4: Future Outlook - Analysts predict that gold prices could exceed $4,000 by the end of the year, driven by ongoing concerns about currency debasement and inflation [11]. - The factors supporting the debasement trade are expected to remain in place for an extended period, suggesting continued interest in gold and bitcoin as safe-haven assets [11][12].