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Bitcoin debasement role as a hedge against inflation and currency dilution is under renewed scrutiny in early 2026 after fresh data showed the cryptocurrency lagging while gold and silver climbed to record highs.
According to market analysts and crypto executives, investors responding to political uncertainty in the United States and investigations involving the Federal Reserve are increasingly favoring traditional hard assets.
The shift, unfolding across global markets this month, raises questions about whether Bitcoin debasement role is weakening at a time when gold and silver are reclaiming their historic status as preferred stores of value.
One of the clearest signals challenging Bitcoin debasement role comes from its performance when priced against gold. Analysis cited by Dutch investment specialist Karel Mercx shows that Bitcoin valued in ounces of gold has fallen to two-year lows, indicating underperformance relative to the precious metal.
According to TradingView data, Bitcoin failed to hold above 20 ounces of gold at the start of 2026 and has since hovered near levels last seen two years ago.
Mercx, an investment specialist at Dutch advisory firm Beleggers Belangen, has been vocal about the implications. In a note written last September, he warned:
“If gold rises above $4,000 and silver above $50, while BTC is below $100,000, a major crash is likely,” — Karel Mercx, Investment Specialist, Beleggers Belangen.
That scenario has partially materialized, with gold and silver pushing to new all-time highs while Bitcoin trades roughly 20% below its peak.
Mercx has since argued that Bitcoin debasement role has failed in this cycle, pointing to weaker price action compared with the previous four-year period.
In his assessment, investors reacting to investigations involving Federal Reserve Chair Jerome Powell have rotated into what he calls “the original hard money,” favoring gold and silver over what he describes as a digital experiment.
As Bitcoin debasement role comes into question, gold and silver have emerged as the primary beneficiaries of capital seeking protection from monetary instability. At the start of 2026, gold surged above $4,580 per ounce, while silver climbed toward $85, reflecting strong demand amid political and macroeconomic uncertainty.
Mercx believes the trend could have broader implications for equity markets. He noted that continued gains in gold could eventually challenge the dominance of U.S. equities, suggesting that the S&P 500 may face pressure if gold’s rally persists.
The reallocation underscores a broader narrative shift, with investors prioritizing tangible assets during periods of institutional stress.
According to Mercx, the assumption that Bitcoin automatically serves as the go-to hedge against inflation has been “broken” under current conditions.
Capital flows, he argues, indicate that Bitcoin debasement role is being sidelined as markets respond to heightened scrutiny of U.S. monetary leadership and concerns about policy stability.
Not all market participants agree that Bitcoin debasement role is permanently diminished. James Lavish, a hedge fund manager and macroeconomic expert, maintains that Bitcoin’s long-term outlook remains constructive despite near-term weakness.
Drawing parallels to the period after the United States abandoned the gold standard in 1971, Lavish argues that structural inflation and mounting government debt create conditions that ultimately favor Bitcoin.
He has pointed to decades of expanding U.S. dollar supply as evidence that currency debasement remains an unresolved issue, suggesting that Bitcoin debasement role could reassert itself over time, particularly among institutional investors.
Meanwhile, crypto trader and New Era Finance host Michael Van de Poppe has offered a more cautious view, warning that time may be running out for a bullish breakout. He suggested that failure to rebound soon could lead to broader declines, reinforcing bearish technical signals across crypto markets.
Debate over Bitcoin debasement role has also revived discussion about the relevance of Bitcoin’s traditional four-year price cycle. Benjamin Cowen, CEO of Into The Cryptoverse, has emphasized the importance of monitoring the S&P 500’s performance relative to gold, arguing that a breakdown there could fundamentally alter market dynamics.
The sentiment that the four-year cycle is ending has been echoed by industry leaders. “The BTC 4-year cycle is dead,” — Simon Dixon, Founder and CEO, Bnk To The Future, wrote on X, adding that 2026 would mark the beginning of a new era for crypto markets.
Analysts at Cipher X have also weighed in, noting that the four-year cycle was never a fixed law but a reflection of liquidity patterns shaped by changing macroeconomic conditions. In that context, they argue, the breakdown reflects shifting assumptions rather than a failure of Bitcoin itself.
The divergence between bitcoin and precious metals in early 2026 has reopened fundamental questions about digital assets’ role in inflation hedging. Whether bitcoin’s underperformance reflects a temporary rotation or a more permanent reassessment of its monetary properties remains unclear.
As gold and silver consolidate near record highs, bitcoin’s next move could determine whether the asset class retains credibility as “digital gold”—or whether that narrative was premature.
