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TL;DR:

  • Gold and Bitcoin rip to all-time highs as the “debasement trade” ramps up
  • On Polymarket, gold closing above $4000 at the end of 2025 has jumped from 8% in early September to over 70% in just a few weeks.
  • Polymarket and Kalshi show trends towards a $150,000 bitcoin price target in Q1 or Q2 of 2026.
  • The Trump administration is implementing policy to run the economy hot and “grow the US out of its debt”.
  • Prediction market traders are expecting a bump in jobs this month with an 82% chance of jobs exceeding 100,000.
  • Traders across Polymarket and Kalshi are anticipating three Fed rate cuts before 2026.
  • Polymarket is forecasting an 86% chance of inflation exceeding 3% and a modest 9% chance of it exceeding 4%. Similarly, Kalshi forecasts a 79% chance above 3.0%.
  • Gold and Bitcoin prices will continue to run if the US and other sovereigns are unable to introduce fiscal austerity (i.e., not happening).

📈 Market Snapshots

Bitcoin and Gold

Debt

Jobs and Unemployment

Monetary Policy

Inflation

Oil and Energy

🌎 Event Breakdown

Gold and Bitcoin rip to all-time highs as the “debasement trade” ramps up: Bitcoin surged to all-time highs over the weekend, eclipsing $125,000 per coin. A few short days later, Gold too reached an all-time high, overtaking the $4,000 psychological level.

What’s going on here?

JPMorgan is referring to this as the “debasement trade”. The strategy involves favoring assets like Bitcoin and gold to hedge against skyrocketing global fiat debt obligations and geopolitical uncertainty. 

Having the largest bank in the US apply a catchy name to a trade Bitcoin and gold holders have been running for years is quite the inflection point.

What does it all mean though?

Bitcoin and Gold Prices

Many believe this bull market is just getting started. On Polymarket, gold closing above $4000 at the end of 2025 has jumped from 8% in early September to over 70% in just a few weeks.

Similarly, Bitcoin price forecasts across Polymarket and Kalshi have moved upward since September 28th. Even aggressive price targets of $150,000 across both exchanges have climbed 10-20% in just over a week.

We’re now trending towards a $150,000 bitcoin price target in Q1 or Q2 of 2026. Odds of getting there before 2026 have dipped over the last 24 hours following a ~3% price correction on October 7th.

Why do traders anticipate the debasement trade will escalate? They believe the US economy will run hot in 2026.

Will the US Economy Run Hot?

Affordability and jobs are growing concerns in the US. This is reflected empirically in the rapid rise of Democratic Socialist Zohran Mamdami’s NYC mayoral bid.

The Trump administration in response to these challenges seeks to grow the US out of its debt. 

According to Trump, “We are becoming a country that is so rich, so powerful. With the kind of growth we have now, the debt is very low, relatively speaking. You grow yourself out of that debt.”

Doing so will require a combination of sustained economic growth through productivity gains and labor force expansion, along with practical fiscal policies.

Let’s first dig into what markets are telling us about the future of US national debt this year.

$37+ Trillion US National Debt

In short, the US debt situation doesn’t look good. Both Kalshi (88%) and Polymarket (98%) reflect a high probability of the national debt reaching $38 trillion before the end of the year. Both markets have decent liquidity providing a bit of an arbitrage for traders.

The national debt first topped $30 trillion in February 2022. At the start of 2025 it was $36.1 trillion. The market doesn’t see this slowing down and anticipates the US will ultimately add approximately $2 trillion to the debt in just one year.

The rate of the debt increase captures how dire the situation is. It’s a debt spiral with interest payments expected to exceed $900 billion in 2025. Investors are looking at gold and Bitcoin as safe haven assets in response.

For the US to grow its way out of this debt burden it will require more productivity and a strong job market. However, AI is already having a meaningful impact and cutting into the job market.

Let’s take a look at the short-term implications.

Jobs and Unemployment

In August we saw a sharp slowdown and the lowest job numbers since the pandemic (i.e., 22,000). During the past three months (June-August 2025), job growth averaged just 29,333 jobs per month, compared to 240,000 in September 2024.

It’s difficult to grow your way out of a debt spiral if your workforce is being depleted.

That said, prediction market traders are expecting a bump in jobs this month with an 82% chance of jobs exceeding 100,000.

We saw a small uptick in unemployment in August (4.3%) as it had ranged between 4.0% and 4.2% up until that point.

Traders anticipate a similar print with an 86% chance of “Above 4.2%” and a 52% of “Above 4.3%”.

These numbers aren’t confidence inducing and indicate a softening economy. This too could be factoring into Bitcoin and gold’s recent rise.

What about monetary policy?

Monetary Policy

Last month the Fed cut rates by 25 bps in response to the softening economy. Most believe this is just the start as traders across Polymarket and Kalshi are anticipating three cuts total before 2026.

Concerning the sequencing, according to Polymarket there’s a 69% chance we see three cuts in a row.

We can anticipate more investment across the economy as interest rates go down and money is priced more cheaply. This will also aid the US when it comes to serving its debt obligations.

Concerning Bitcoin and gold, with more liquidity in the market and investors chasing yield, we can expect a portion of that liquidity to find its way into Bitcoin and gold.

This is also a key consideration fueling the debasement trade. As rates lower, we can expect the dollar to weaken and inflation to rise.

Inflation

Polymarket is forecasting an 86% chance of inflation exceeding 3% and a modest 9% chance of it exceeding 4%. Similarly, Kalshi forecasts a 79% chance above 3.0% (i.e., 59% chance between 3.1% to 3.5% and 20% chance 3.6% to 4%).

Those executing the debasement trade anticipate that inflation will rise and the dollar will weaken with the Fed rate cutting cycle.

In theory, moderate inflation could help the US service its debts. However, the impact of rising costs on the populous is politically untenable for the Trump administration.

A much better way for the US to grow its way out of its debt is with real, strong economic growth, moderate inflation, and fiscal discipline.

Cheap energy helps create the foundation for this.

Oil and Energy

Cheap energy is a critical input when it comes to productivity and GDP. If we’re to look at Texas and California markets in particular, prediction market traders anticipate a rise in California gas prices and a decrease in Texas prices.

This distinction can primarily be drawn to policy distinctions between the two states. If we are to see a rise in energy prices, productivity and economic output are likely to decline, further supporting the debasement trade.

The Next Chapter for Gold and Bitcoin

As the debasement trade ramps up it will be critical to remain focused on these macro indicators: sovereign debt, jobs and unemployment, monetary policy, inflation, and energy. Not to mention the winds of geopolitical tensions and uncertainty, which many argue are the most severe they’ve been in decades.

Gold and Bitcoin prices will continue to run if the US and other sovereigns are unable to introduce fiscal austerity. It's unlikely they will be able to do so however given the current affordability crisis. No political party can expect to win elections by cutting into social security, and healthcare which is mathematically necessary at this point to address the fiat debt spiral we find ourselves in, not only in the US, but across the world.

What will it take to slow gold and Bitcoin down?

…a radical change in sovereign spending (not happening) and significant economic growth.

Will the growth required be realized in the face of these macro headwinds? Unlikely.

Expect the debasement trade to accelerate and for gold and Bitcoin to continue to rip in 2026. 

:: insert generic “Not financial advice” note here ::

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