Why gold is a China liquidity story, not a US inflation one

Gold and Bitcoin are often grouped together as an expression of the “debasement” trade, yet they experienced markedly different performance through late 2025 and early 2026. This divergence has understandably attracted attention. Our latest macro report, ”The debasement myth: why gold is a China liquidity story, not a US inflation one,” examines the underlying flows behind this trend and explores the path forward.

Authored by Stephen Coltman, our Head of Macro at 21shares, the report covers:

• Complementary hedges: Why the diverging drivers of gold and bitcoin make a dual allocation more robust than holding either in isolation.

• The China factor: An analysis of China’s strategic pivot into gold and its impact on global liquidity.

• Developed market risk: Why fiscal projections suggest the US and EU are moving toward the currency volatility and funding stress typically seen in emerging markets.

• Wealth preservation: Evidence of how bitcoin is functioning as a primary ”release valve” for capital in economies facing systemic debasement.

You can access the full report below for Stephen’s complete analysis of these fiscal shifts and their implications for portfolio construction.

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Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com

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Disclaimer

The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.