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When the U.S. dollar weakens, it is understood the debasement trade will favor assets considered a hedge against the dollar debasement.
After gold and silver hit record highs, even oil is rallying.
The West Texas Intermediate (WTI), the crude oil that serves as the benchmark in North America, rose 13% this month to trade at $65.59 at press time. Brent Crude, the global oil benchmark, rose 14% this month to trade at $69.88 at the time of writing.
The primary reason behind the oil rally is the U.S. threat to attack Iran, the oil-rich Asian country. U.S. President Donald Trump has threatened that a massive armada was headed towards Iran. Iran vowed to "respond like never before."
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Rising oil costs translate to rising prices of daily goods and services because higher gasoline prices make transportation costlier. When it gets costlier to buy goods on an everyday basis, there is a rise in inflation.
In such a case, central banks raise interest rates so that it becomes difficult to raise credit. When the Federal Reserve hiked rates in 2022, Bitcoin (BTC) fell roughly 65%.
So far, Bitcoin has failed to take advantage of the "dollar debasement" trade narrative and has crashed 25% in the last three months to trade at $83,768.80 at the time of writing.
For now, the Fed has kept interest rates unchanged in the target range of 4.5%-4.75%.
If the price of oil rises and contributes to rising inflation, the Fed could step in to raise interest rates and rein in Bitcoin even more.
Related: Billionaire Bill Ackman proposes 'useful' tool to tackle Iran's internet shutdown
This story was originally published by TheStreet on Jan 30, 2026, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.
