2026 Debasement Outlook: Gold and Bitcoin Signal a Gradual Repricing of Fiscal Reality

Key Takeaways 

1. Gold’s break above $4,000 per ounce in 2025 naturally drew comparisons to its 1979 rally, a period defined by runaway inflation, oil shocks and Cold War tensions. 

2. Total US public debt has doubled over the last 10 years, from $18.15trn to $36.21trn at the end of Q2 2025. Meanwhile the last fiscal surplus for the US federal government was recorded in 2001. 

3. President Donald Trump’s “Liberation Day” tariff package in April not only stoked inflation worries but also deepened global concerns that the US is no longer the predictable, dependable trade partner it once was. 

Gold and Bitcoin [BTC/USD] hitting all-time highs in 2025 revived claims that the “debasement trade” was finally unfolding. Rising fiscal deficits and ballooning public debt have become defining features of modern economies. Persistent inflation and expectations of looser monetary policy have once again reinforced long-standing worries about currency devaluation. 

As we head into 2026, the key question for investors is whether the debasement argument is strong enough to warrant repositioning portfolios, either for the near term or with a longer horizon in mind. 

2025 Review: Gold and BTC Surge to All-Time Highs as Trump Policies Stoke Debasement Fears 

Debasement refers to the fall in purchasing power of a currency due to inflation, as well as poor fiscal and monetary policies. Debasement is a story as old as time, one that resurfaces during periods of currency weakness, political dysfunction, fiscal deficits or hard-asset outperformance.  

2025 was one such year. 

The US dollar index [DXY], which tracks the performance of the US dollar against a basket of global currencies, had fallen over 8% in 2025 as of November 28. 

Meanwhile, gold delivered its strongest year in more than four decades, surging to over $4,370 per ounce and rising 57% year to date. Bitcoin, described by BlackRock’s Larry Fink and Federal Reserve Chair Jerome Powell as digital gold, underperformed its physical counterpart. It set a new high above $126,000 on 6 October 2025 before pulling back to around $90,000 at the time of writing, leaving it roughly flat for the year. 

Other precious metals such as silver, platinum and palladium also posted significant gains in 2025. Silver surged as much as 85% to nearly $57.00 per ounce in the 12 months to November 28. Meanwhile, platinum and palladium rose as much as 79% and 50%, respectively, in the same period. Paul Wong, market strategist at Sprott Asset Management, described it as a “collective move” reflecting a broader shift into hard assets as stores of value.

Political noise contributed meaningfully to the shift in investor psychology. 

US President Donald Trump’s “Liberation Day” tariff package in April not only stoked inflation worries but also deepened global concerns that the US is no longer a dependable trade partner. The recent 43-day government shutdown, the longest in US history, only added to the unease surrounding the debasement narrative. 

Another important undercurrent was the growing perception that US monetary policy was becoming increasingly politicised. Throughout 2025, Trump publicly pushed for aggressive rate cuts, at one point calling for a 300 basis point reduction to lower the cost of servicing the nation’s debt. These interventions heightened fears that the Federal Reserve was being drawn into the political arena at a time when fiscal pressures were already intensifying. 

Perhaps most alarmingly, the fiscal backdrop has continued to deteriorate both in the United States and abroad. The US has not recorded a fiscal surplus since 2001, while the nation’s total public debt has doubled over the last 10 years from $18.15trn to $36.21trn at the end of Q2 2025, as seen in the graph below. 

On a positive note, annual US inflation rates have fallen from a multi-decade high of 9.1% in June 2022 to 3% in September 2025, although the readings remain above the Fed’s target of 2%. 

The Fed has been balancing these pressures while gradually cutting rates, from 5.5% in August 2024 to 4% by October 2025. More cuts are expected next year. For debasement-conscious investors and traders, easier monetary policy and any renewed political or institutional uncertainty may create conditions that support increased interest in hard-asset prices such as gold and Bitcoin over time. 

2026 Outlook: De-Dollarisation, Central Bank Buying and Rate Cut Cycle 

Gold’s break above $4,000 per ounce in 2025 naturally drew comparisons to its 1979 rally, a period defined by runaway inflation, oil shocks and Cold War tensions. But what followed between 1980 and 2005 was nearly 25 years of poor gold price performance. Whether gold enters a period of consolidation or weaker performance after its recent peak, or after any subsequent highs should they occur, may be a trend to watch closely in 2026. 

A closer look, however, shows that the present situation is not a direct replay of the late 1970s. Inflation in 2025 is nowhere near double-digit levels, crude oil prices have been trending lower and the US dollar, despite weakening, remains the world’s dominant reserve currency.

Furthermore, the 1980s were defined by extreme monetary tightening, with the Federal Reserve raising rates to nearly 20% to crush inflation. This strengthened the dollar and made yield-bearing treasuries far more attractive than non-yielding gold. Even by the end of that decade, rates were still around 8.5%. 

Today, the backdrop is the opposite. The US is in the middle of a rate-cutting cycle, supported by a cooling labour market and softening inflation. Goldman Sachs expects two 25-basis-point cuts in 2026, bringing the Fed funds rate to 3.0-3.25% by June. With inflation easing, lower interest rates may do more to support gold demand than to reinforce debasement concerns.

However, before drawing conclusions, it is necessary to examine one of the most important drivers of gold demand today: central banks. 

Over the past three years, central banks have purchased more than 1,000 tonnes of gold annually, far exceeding the 400-500 tonne average of the previous decade, according to the World Gold Council (WGC). 

The trend is broad-based and driven by long-term strategic priorities, most notably hedging against US trade policies, sanctions risk and asset-freeze exposure. The decision to cut Russia off from the SWIFT system and freeze a large portion of its reserves in 2022 was one of several events that highlighted these vulnerabilities. Combined with wider geopolitical tensions and shifting policy dynamics, these factors have contributed to a de-dollarisation trend and increased interest in stores of value assets such as gold and Bitcoin. 

This shift has become more visible in 2025. For the first time since 1996, central banks now hold more gold than US Treasuries in their reserves. In the WGC’s 2025 Central Bank Gold Reserves survey, 76% of survey respondents said that gold will make up a larger share of sovereign reserves over the next five years, while 73% expect the US dollar’s share to decline. 

This aligns with IMF data showing the dollar’s share of global foreign-exchange reserves fell from 65.36% in 2016 to 57.79% in 2024. It also tracks the decline in the share of foreign ownership of US debt, which dropped from 35% in 2020 to 30% in 2024, according to official US data. Notably, China’s contribution fell from 15.17% to 8.87% over the same period.

As these structural forces continue to reshape the global reserve landscape, major institutions are turning increasingly bullish on gold. VanEck’s gold price outlook suggests bullion prices could head toward $5,000 per ounce over the next five years. J.P. Morgan is even more optimistic in the near term, forecasting gold will hit $5,200-5,300 by the end of 2026, supported largely by sustained demand from emerging market central banks.  

Bitcoin also sits within this broader narrative. With its decentralised design and ultimately fixed supply, it is often viewed as a potential hedge against monetary expansion and policy uncertainty, though it remains far from being regarded as a safe haven on par with gold by central banks and most of traditional finance.

Bitcoin heads into 2026 after a turbulent year that, by early December, has left the asset largely flat on the charts. It was initially buoyed by Trump’s election win but soon came under pressure as a series of policy surprises unsettled markets. In October, the announcement of 100% China tariff measures triggered one of the largest liquidation events in the crypto asset class’s history.  

Further strain emerged from renewed concerns surrounding Digital Asset Treasury companies, including Saylor’s Strategy [MSTR] (formerly MicroStrategy). MSCI, a firm that provides major stock indexes, launched a consultation on whether companies whose primary activity is holding Bitcoin or other digital assets should be classified more like fund structures rather than operating businesses, a change that could affect their eligibility for key equity indexes. JPMorgan estimates that removal from MSCI indexes could prompt around US$2.8bn in outflows, potentially increasing to about US$8.8bn if additional index providers adopt similar classifications. The final decision, due on 15 January 2026, could be an early catalyst for Bitcoin in the new year.

In light of recent pullbacks in Saylor’s Strategy and the forthcoming MSCI decision, the ongoing trend of corporate adoption will be important to monitor in 2026. Public companies held roughly 4,100 Bitcoin in January 2020. By January 2023, that figure had risen to around 200,000. As at early December 2025, corporate holdings have surged to approximately 1.06 million Bitcoin, according to Bitcointreasuries.net, with 209 public companies and more than 70 private firms holding Bitcoin on their balance sheets.  

In addition to corporate holdings, Bitcoin ETFs and funds hold roughly 1.5 million BTC, making them another critical driver heading into 2026. Vanguard’s recent reversal, allowing selected crypto-based ETFs from December 2025, is striking given its CEO stated in 2024, “We’ll never offer Bitcoin ETFs, we’re not going to change our mind around this.” This shift raises an important question for 2026: does mainstream asset manager resistance continue to fade, and do ETF inflows accelerate in a lower rate environment?

This accumulation trend is now extending into an even larger domain, as sovereign entities begin to explore Bitcoin in a more deliberate way. The United States’ Strategic Bitcoin Reserve is one example, with government entities globally holding about 645,000 Bitcoin. To date, these balances have largely come from assets seized from illegal activity rather than purposeful accumulation.

Even so, 2025 delivered early signs of strategic interest. State-backed sovereign wealth funds, including those of Abu Dhabi and Norway, invested in Bitcoin, and Texas became the first US state to purchase Bitcoin for its treasury. More proactive sovereign involvement in 2026 could have significant ramifications, potentially encouraging other countries to follow suit. The scale of these players, should they become more active alongside corporates and funds, means Bitcoin is likely to be shaped less by retail flows and more by the decisions of large allocators.

With these factors in play, markets are watching whether Bitcoin continues to track traditional four-year cycle dynamics, which may imply further consolidation, or whether a more elongated cycle begins to take shape in 2026, potentially allowing for a broader range of upside outcomes. Any regulatory decisions in the United States will be closely watched.

^{Source: Lyn Alden Media, YouTube}

As markets size up these narratives, it’s worth noting that not all analysts share the view that debasement risks are accelerating as quickly as some gold and Bitcoin advocates may suggest.

Independent fund manager Felix Martin noted that global currencies rose sharply against the dollar in 2025. Elsewhere, Jamie McGeever of Reuters highlighted the 10-year Treasury yield’s decline from 4.79% at the start of the year to about 4.01% in late November as evidence that investors are not behaving as though a sudden loss of confidence in the dollar is underway. 

Through this lens, debasement may not be an imminent crisis, but a serious yet slow-moving pressure that could continue to build if underlying fiscal trends remain unaddressed. The timing and shape of any eventual fallout, however, remain uncertain.

“The forces driving deficits and currency debasement are structural rather than cyclical. Without a significant reset, such as an inflationary period followed by coordinated fiscal reform, the current trend is likely to persist. US policy is effectively calibrated to ‘run it hot’ in an effort to grow nominal GDP faster than the debt burden, implying continued fiscal and monetary friction ahead,” wrote Wong of Sprott Asset Management in a recent note.

“From this perspective, the debasement trade is still in the early stages of a longer structural cycle,” he added. 

2026 Watchlist: Debasement Theme Stocks and ETFs to Monitor 

Conclusion 

The debasement theme shaping gold, Bitcoin and currency markets in 2026 underscores a broader shift toward hard assets, institutional hedging and rising scepticism over long-term fiscal discipline.  

For investors and traders, this force sits alongside our other Furious Five forces, AI, energy, robotics and defence, as a structural driver shaping the global economy. And while the dollar remains dominant, the steady rotation into alternative stores of value points to a world preparing for volatility rather than stability.

Series Overview

Furious Five: CMC’s 2026 Outlook 

Five forces. One furious charge into 2026.

CMC’s Furious Five series examines five pivotal themes that defined 2025, how far these powerful forces could extend through the year ahead, and what might stand in their way.

Explore our market outlook across AI, Energy, Robotics, Defence, and Debasement to see where the next wave of momentum and disruption could emerge in 2026. 

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