Welcome back to The Breakdown with me, NLW.

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What's going on, guys? It is Thursday, October 9th, and today we are talking about the debasement trade. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation. Come join us on the breakers discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, well, Bitcoin's huge run-up to begin October is grabbing a ton of attention on Wall Street. Research shops are combining it with a spike in the gold price and a decline in the dollar, and they're calling it the debasement trade, and it's the hottest trade in town. J.P. Morgan used that name and a research note at the beginning of last week, defining it as a trade that, quote, reflects a combination of factors, which in our client conversations range from elevated geopolitical and policy uncertainty, to uncertainty about the longer-term inflation backdrop, to concerns about debt debasement, due to persistently high government deficits across major economies, to concerns about Fed independence,

to waning confidence in fiat currencies in certain emerging markets in particular, and to a broader diversification away from the U.S. dollar.

Now, that laundry list of concerns used to be fodder for discussion in Bitcoiner and

goldbug circles, but these fears are now held by a significant portion of J.P. Morgan customers.

Economics professor Muhammad L. Irian amplified the theme last Thursday, tweeting,

per this CNBC reporting, the strategy favoring golden Bitcoin now has a name.

J.P. Morgan analysts are calling it the debasement trade. Of course, the snark from

bitcoins was off the scale. Michael Saylor wrote, we call it, saving our money. Bitwise researcher Andre Dragosh tweeted, Bitcoiners have been talking about the debasement trade for years. The fact that mainstream economists have just started talking about the debasement trade right now tells you everything you need to know about the current state of the economics profession. Now, whatever your opinion of mainstream economists is, it is self-evidently a big deal that they're

waking up to the debasement trade as a legitimate view rather than the domain of fringe weirdos. Isabella Kaminska, the former editor of F.T. Alphaville, tweeted, The debasement trade became a thing last week when Mohamed Al-Irean posted about it. I find this amusing because the supposed wing-nuts of the financial space have been screaming about the debasement trade, also known as the zero hedge trade for decades now.

Though, as the trader and my family loves to tell me, it is also true that it doesn't matter if you're right about something in markets if you're right about it at the wrong time. Nonetheless, there's something very Voldemorty going on here. Once the serious people in finance start saying things out loud that were previously unsayable, because they're now too obvious to deny, I dare say we're in the realm of slowly than suddenly.

And this week, Deutsche Bank has gone all in on the debasement trade. What she's referring to is a Deutsche Bank note published on Monday called Gold's Reign Bitcoin's Rise that advised customer to jump on the trade. Jeff Park, the CIO of ProCap Bitcoin, isn't sure either name is quite right for describing what's going on, commenting, I don't like the term to basement trade. It implies the unwanted erosion of something durable and righteous. What's happening is the opposite. Everyone is learning to gravitate towards something valuable and permanent. We're long on the purification trade. Now, we've had a few glimpses of this type of thing before, where Bitcoin all of a sudden starts being discussed in a serious way as something other than the riskiest of risk assets. We had Paul Tudor Jones in his great monetary inflation thesis in 2020, in which he explained that COVID is going to require a ton of money printing, and Bitcoin is the fastest horse in the race. Then again, PTJ has always been a maverick and doesn't represent the views from the largest institutions on the street. Then we got Larry Fink and BlackRock come on board with Bitcoin in 2022. Once Fink became a believer, he went on TV and declared that investors buy Bitcoin because they're frightened of the debasement of their currency. What's happened over the past two weeks takes it to the next level. Fink was describing a theoretical investment thesis for Bitcoin, but now we have two of the most important banks throwing their weight behind it. J.P. Morgan, in particular, is saying that their clients have specific concerns about debasement, and they're buying gold and Bitcoin to alleviate their fears. Again, these thoughts are nothing new for Bitcoiners, but it's a big change of reference for normal investors. We got a glimpse of this narrative striking a court on Wall Street last October when missiles were exchanged between Iran and Israel. Bitcoin dumped and then took off. Now, the rally actually seemed like it was more closely related to Binance converting their billion dollar insurance fund from stablecoins to Bitcoin, but the seeds of the narrative were definitely planted. This time around, all of Wall Street saw the government shut down and Bitcoin take off from there. It was the kind of price action that nails home the core thesis for Bitcoin as digital gold in the face of uncertainty. BitMex co-founder Arthur Hayes believes this was a huge switch that just triggered. He tweeted, The new Tradfie Meta-Narrative is the debasement trade. It took them almost 20 years to notice. Don't believe for a second they will forget about it just because of the Bitcoin four-year cycle. It's time for the banksters to sell gold, crypto, and tech stock derivatives to clients. This was exactly the same trade that Paul Tudor Jones suggested in an interview on Squawkbox on Monday when he said all the ingredients are in place for some kind of a blowoff.

For many Bitcoinsters, this feels like the moment they have been preparing for.

Lawrence Leverd commented, I literally wrote a book on the monetary debasement trade and it is unfolding in spades as I predicted. All the media outlets are now recognizing and discussing this

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