Ken Griffin, founder and CEO of Citadel, raised a red flag about a growing pattern in which investors are moving their money into gold, silver, and Bitcoin—what he termed a “debasement trade.” Speaking to Bloomberg, Griffin noted that market participants are finding these assets to be the least risky alternatives to the U.S. dollar—an occurrence he described as “really concerning.”
In his view, Griffin stated, “The move shows that there is less and less trust in the U.S. dollar as a stable currency, and thus investors decide to move their money into assets that will keep their value in the long term.” He underlined that this trend is causing “asset inflation of significant magnitude away from the dollar,” meaning investors are no longer relying on the dollar for their funds anywhere in the world..
Griffin explained that, to a large extent, the reason for this capital shift is to reduce exposure to the risk of the American sovereign. He pointed out that investors remain cautious about the development of both fiscal and monetary policies in the United States. This concern is heightened when government debt is high and deficits continue rising, fueling anxiety about the dollar’s long-term stability.
The billionaire hedge fund manager emphasized that historically, gold and silver were the most reliable safe-haven assets when the world or the currency system faced uncertainty. Nevertheless, Bitcoin’s addition to this group of precious metals marks a fundamental change in how investors approach building their holdings of non-fiat assets.
Griffin’s statement is timely as the institutional embracement of the digital assets is increasing day by day, with Bitcoin turning to be the most preferred store of value and the best way to hedge against the fall of the dollar. Although gold and silver are still the most significant safe-haven allocations, Bitcoin’s capped supply and its decentralized features have made it the most attractive investment by those who want to spread their risks in light of the U.S. fiscal policy concerns.
Griffin’s alarm is one of the many instances where the flow of funds from one asset to another is evident, with both traditional and digital assets benefiting from the investors’ attempts to do their best to avoid being adversely affected by a possible dollar depreciation and sovereign debt exposure risks.
