Battered BTC could find solace in 'debasement' trade

The conflict between the U.S., Israel and Iran intensified, pushing markets to de-risk and sending oil higher. Bitcoin dropped to $66,300, down about 0.5% over 24 hours after a weekend high near $68,000, while the CoinDesk 20 Index fell more than 2% and S&P futures lost about 1%.

Beyond the headlines, the war could strengthen the so-called debasement trade, where investors rotate into scarce-supply assets like gold and bitcoin expecting fiat currencies to lose value. Prolonged conflict can worsen public finances, prompting governments to rely on central-bank bond purchases or quantitative easing to monetize debt and expand the supply of fiat money.

Traders often front-run that process by buying stores of value such as gold and BTC. Gold has rallied on debasement flows for over a year; bitcoin did not participate then but now looks oversold after falling to under $67,000 since October, so a debasement-fueled bounce cannot be ruled out.

United States, Israel, Iran

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