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Mounting fiscal pressures and widening deficits are reshaping the global debt profile, triggering a rush into hard assets such as Bitcoin, gold, and silver. Investors worldwide are increasingly abandoning fiat currencies as fears of debasement mount amid political uncertainty and soaring public debt.
According to a Bloomberg report on Monday, the so-called “debasement trade”, a move toward assets insulated from inflation and fiscal mismanagement, has gained momentum as the global debt profile worsens across leading economies.
Japan, the United States, and parts of Europe have become central to this shift, as each faces escalating debt burdens and fragile currency performance. Analysts warn that the global debt profile now reflects systemic fiscal imbalance that could reshape how investors store value in the coming decade.
In Japan, the yen plunged 1.6% after pro-stimulus politician Sanae Takaichi emerged as the frontrunner in the race to become the nation’s next prime minister. Her anticipated fiscal policies have dimmed hopes for tighter monetary control, deepening concerns about Japan’s already precarious global debt profile.
The yen’s decline pushed it to record lows against both Bitcoin and gold, underscoring investor skepticism toward Japan’s debt-fueled economic approach. The move also reverberated across global markets, signaling that fiscal and monetary flexibility may have reached their limits in major economies.
Meanwhile, the U.S. dollar has weakened under the strain of a prolonged government shutdown and rising debt concerns. Since the start of the year, the dollar has lost nearly 30% of its value against Bitcoin. The situation has only intensified attention on the U.S.’s role in shaping the global debt profile.
Across Europe, the euro fell 0.1% against the dollar as renewed political unrest in France dampened investor confidence. With debt levels climbing and policy responses fragmented, the European contribution to the global debt profile continues to amplify volatility in global markets.
As traditional currencies lose traction, Bitcoin has surged to new heights above $125,000, while gold and silver have reached fresh peaks. Analysts describe this surge as a defensive pivot amid fears that the global debt profile has reached an inflection point.
Chris Weston, Head of Research at Pepperstone Group, noted that the move reflects a classic momentum trade reinforced by political chaos and inflation anxiety. “You’ve got to be in it,” — Chris Weston, Pepperstone Group.
Similarly, JPMorgan analysts, in a research note dated October 3, linked Washington’s fiscal dysfunction and the dollar’s decline to a familiar pattern that emerges when investors seek alternatives during debt crises. They drew parallels between the current “flight to safety” and investor behavior during the 2008 financial crisis, when the global debt profile similarly deteriorated under aggressive monetary stimulus.
Despite a modest rebound in the Bloomberg Dollar Spot Index earlier this week, the greenback remains down roughly 8% this year — a signal that faith in fiat stability continues to erode.
Bitcoin reached a record high of $125,700 on Sunday morning, surpassing its previous peak of $124,500 set in August, according to CoinMarketCap data. The surge coincided with centralized exchanges reporting their lowest Bitcoin reserves in six years, a development signaling tightening supply and accelerating demand.
The rally marks a strong start to October — often referred to as “Uptober” by traders — following a temporary dip to $107,800 in early September. Over the past week, Bitcoin has climbed steadily, supported by optimism surrounding its role as a hedge in an increasingly unstable global debt profile.
Corporate investors are also benefitting. Strategy Inc., which began accumulating Bitcoin in 2020 as a treasury reserve asset, disclosed that its BTC holdings have reached a record $77.4 billion. The firm’s initial investment of $2.1 billion has multiplied over 35 times in five years, highlighting how the shifting global debt profile continues to reward early adopters of decentralized assets.
The growing mistrust in central banks and government fiscal management underscores a broader global transition. As nations struggle to contain deficits, the global debt profile is becoming a defining force in capital markets.
For many, Bitcoin and gold are no longer speculative assets but essential hedges against an unsustainable economic model driven by debt expansion. As Weston and JPMorgan’s analyses suggest, the global debt profile could continue to determine investment flows well into 2026 — with hard assets poised to benefit from every sign of fiscal distress.
