Will the "devaluation trading" of Bitcoin restart in 2026? Institutions provide the answer

From a peak of $126,080 down to $91,362, Bitcoin’s 30% retracement by the end of 2025 has sparked a core market question: does the logic of Bitcoin as a “devaluation hedge” still hold? As we enter 2026, multiple institutions have provided their assessments.

What is “devaluation trading” and why is it related to Bitcoin

The core logic of “devaluation trading” is simple: when government debt expands and the money supply increases, fiat currency purchasing power declines, and investors need to allocate scarce assets to hedge this risk. Bitcoin, with its fixed supply cap of 21 million and global liquidity, has become an ideal target for this strategy.

2025 is a typical year for this logic. Against the backdrop of expanding fiscal deficits and increasing money supply, gold hit new all-time highs, and Bitcoin was also viewed as a similar hedge asset. However, in the fourth quarter, the crypto market experienced a sharp correction, with Bitcoin falling nearly 30% from its October high, prompting market doubts about the validity of this logic.

How do institutions view it: short-term volatility does not change long-term logic

The key point is that many institutions believe this short-term pullback does not mean the end of the trend.

According to the latest news, Bloomberg senior ETF analyst Eric Balchunas pointed out that devaluation trading is a highly patient, long-term strategy, and short-term price fluctuations do not alter its core logic. He believes that as government debt and liquidity continue to expand, related trades still have a solid foundation.

Pepperstone research analyst Dilin Wu explained this retracement from an inflation expectation perspective. She stated that the weakness in Bitcoin at the end of 2025 is more like a phased easing of market inflation expectations rather than a fundamental reversal. More importantly, since the US approved a spot Bitcoin ETF in 2024, increasing long-term capital inflows have shifted Bitcoin from a high-volatility speculative asset to a structural hedge asset.

Key drivers for 2026: policy, debt, and institutional allocation

Whether Bitcoin can reignite “devaluation trading” in 2026 depends on the resonance of three factors:

Greg Magadini, head of derivatives at Amberdata, believes that if the Fed shifts to a dovish stance, liquidity will improve and “devaluation trading” could be reactivated, with Bitcoin potentially becoming one of the main beneficiaries. Several analysts expect that Trump’s government will push for looser fiscal and monetary policies in 2026 to stabilize the economy ahead of midterm elections.

Structural changes are quietly happening

It is worth noting that the market structure of Bitcoin itself is changing. The approval of spot Bitcoin ETFs in 2024 attracted significant long-term institutional capital, transforming Bitcoin from a purely speculative asset into a hedge tool within asset allocation. From this perspective, even if short-term prices fluctuate, long-term allocation demand remains.

Summary

Whether Bitcoin can reignite “devaluation trading” in 2026 may not be a simple “yes” or “no.” According to institutional views, it depends on the resonance of debt expansion, policy orientation, and institutional allocation. As long as the long-term inflation devaluation expectation remains intact, the narrative of Bitcoin as “digital gold” still has a foundation for resurgence. The 30% short-term retracement may just be a phase in this long-term game; the real test lies in how the policy environment evolves.