"Depreciation trading" is booming! Bitcoin hits a new all-time high above $125,000

Driven by the broad-based rise in risk assets triggered by the U.S. government shutdown and the general optimism brought by the “Uptober” rally, the world’s largest cryptocurrency, bitcoin, hit a new high above $125,000 last weekend, surpassing the previous record set on August 14.

Bitcoin’s latest rally was supported by the rise in U.S. stocks and renewed inflows into bitcoin-related exchange-traded funds (ETFs). Investors speculate that the government shutdown, which began last Wednesday, will drive funds into safe-haven assets—a phenomenon market participants refer to as the “devaluation trade.”

The core of the “devaluation trade” is to hedge against the decline in fiat currency purchasing power. It refers to investors proactively moving funds out of dollar assets and into assets considered to have greater value-preserving potential—such as gold, stocks, and cryptocurrencies—when the market expects a currency (especially the U.S. dollar) to weaken, in order to avoid the risk of shrinking purchasing power.

Uptober is a term unique to the cryptocurrency market to describe the October rally, a portmanteau of “Up” and “October,” specifically referring to the seasonal rise in cryptocurrencies during October. Bitcoin has risen in 9 out of the past 10 Octobers.

Joshua Lim, Co-Head of Markets at crypto institutional brokerage FalconX, said: “Right now, many assets—including stocks, gold, and even Pokémon cards—are hitting all-time highs. It’s no surprise that bitcoin is benefiting from the dollar devaluation narrative.”

As the largest digital asset by market capitalization, bitcoin has risen more than 30% so far this year.

For most of the past year, bitcoin’s price has steadily climbed, thanks to the friendly legislative environment in Washington under President Trump’s administration. Publicly listed companies led by Michael Saylor’s Strategy company have adopted the increasingly popular “bitcoin hoarding” corporate strategy, boosting demand for the currency. This strategy has also spread to smaller competing coins such as ether, driving a broad rise across the digital asset sector.

In the week ending October 3, spot bitcoin ETFs saw a cumulative net inflow of $3.24 billions, the largest weekly inflow so far in 2025 and the second largest weekly inflow since their launch in January 2024.

Last Friday, despite the possibility of a prolonged U.S. government shutdown and weak business activity data, a new wave of large-scale AI deals and partnerships pushed U.S. stocks to record highs, while U.S. Treasuries and the dollar exchange rate fell. Meanwhile, with U.S. interest rates declining and ongoing inflation concerns, central bank gold purchases worldwide are set to drive gold to a seventh consecutive weekly gain.

Geoff Kendrick, Global Head of Digital Asset Research at Standard Chartered Plc, said: “This government shutdown is significant,” adding that he expects bitcoin to rise during this period. He noted that during the last government shutdown from 2018 to 2019, bitcoin was in a “different situation”—at that time, its price movement was less correlated with traditional risk assets.

He added: “This year, bitcoin trading carries ‘U.S. government risk,’ which is best reflected in its relationship with the U.S. Treasury term premium.”

Kendrick said that new ETF inflows and the U.S. government shutdown could further push up cryptocurrency prices in the coming weeks. In a report to clients, he stated that bitcoin is expected to break through its all-time high within days and could reach $135,000 in the coming weeks, slightly later than his previous forecast. He also reiterated his year-end target of $200,000 for bitcoin.