Bitwise: Fiat currency flight leads investors to bitcoin and gold

• Bitcoin seen as digital hedge against fiat currencies
• Central banks increase gold purchases since 2008
• Bitcoin ETFs to Outperform Gold in Fundraising in 2024

Bitwise’s chief investment officer Matt Hougan said there is growing global recognition of the risks inherent in the fiat-based monetary system. In a recent communication with clients, he compared the current global reliance on the model to a kind of “collective blindness,” referring to the famous parable by David Foster Wallace about fish that don't notice the water they swim in.

Since the United States broke off the gold standard in 1971, the fiat system has dominated, which Hougan said has alienated most of today’s finance professionals from any experience outside of that model. “Like almost every other financial professional working today, I have spent my entire life swimming in the waters of a fiat-based world,” he noted.

That perception, however, is changing. Hougan argues that more people are questioning the legitimacy of this model. “Maybe printing money out of thin air, as we started doing in 1971, is actually a crazy idea. Maybe sound money requires limits,” he said. This reassessment is fueling a search for assets that offer both safety and scarcity — like gold and bitcoin.

💸 Bitwise: “Fiat is losing trust… it's Bitcoin time” 💣 @BitwiseInvest says investors are losing confidence in fiat currencies and turning to Bitcoin as a reliable store of value amid inflation and monetary concerns. https://t.co/bVH5o0l0a6

— Crypto economy (EN) (@CryptoEconomyEN) June 18, 2025

He cited a report that central banks stepped up their gold purchases after the 2008 financial crisis and especially after the 2022 invasion of Ukraine. The move reflects growing fears about currency devaluation and reserve seizures, phenomena that encourage the search for autonomous assets that are resistant to state interference.

While governments are turning to gold, individual investors are turning to bitcoin as a form of digital protection. According to Hougan, bitcoin ETFs have already raised $45 billion in 2024, surpassing the $34 billion earmarked for gold ETFs in the same period.

Even though bitcoin is still considered a small and illiquid market for major central bank interventions, the growing institutional interest indicates a significant paradigm shift. For Hougan, this trend highlights that portfolios based exclusively on stocks and bonds remain vulnerable to the instability of the fiat system.