For many years now, there has been one narrative that Bitcoin has sought to capitalise on. And that is if governments borrow too much, fiat currencies lose their purchasing power and investors will seek refuge in scarcer assets. That is the idea of the debasement trade.Now with US government debt topping $40 trillion and long-term Treasury yields rising to multi-year highs, concerns around fiscal sustainability is becoming harder and harder to ignore. And it is not just in the US, we're also seeing that to be the case in Japan, Europe, and the UK.As such, that very narrative for Bitcoin is being put into another real world test.But as we're seeing since last year, the interesting part is that gold - and not Bitcoin - still looks to be the cleanest expression of the debasement trade.The straightforward case for goldUnder normal circumstances, rising Treasury yields should be a problem for gold.After all, gold pays no interest at the end of the day. And when investors can earn up to nearly 5% on government bonds, the opportunity cost of holding gold becomes considerably higher.But if investors were simply worried about inflation, higher yields might be enough compensation. And that just isn't really the case at in point at the moment.Instead, if the concern becomes more about the credibility and sustainability of the debt itself, gold then suddenly starts to look more attractive. Those are two very different trades and perhaps better explains what has been driving gold prices higher for much of the past two years.So why isn't Bitcoin behaving like digital gold?Theoretically, Bitcoin does have many of the characteristics investors should want in a debasement hedge.Bitcoin supply is capped at 21 million coins. No government can print more of the cryptocurrency. And unlike gold, Bitcoin can move across borders digitally without requiring physical storage.Hence, that is why the "digital gold" comparison has existed for so long.However, the difference between the two becomes much clearer when financial and market conditions get rather uncomfortable.Let's look at Bitcoin at its core. At the end of the day, the cryptocurrency is still highly sensitive to liquidity, interest rate expectations and general risk appetite.Higher real yields can hurt speculative assets and falling stocks can also drag the crypto market lower. And a stronger dollar can tighten financial conditions. Adding to that list is the fact that Bitcoin exposure these days are increasingly coming through ETFs, meaning that the cryptocurrency is now more embedded into traditional portfolio flows than it was during earlier cycles.On the other hand, gold behaves much differently.When investors become nervous about fiscal sustainability, geopolitical risk, and/or the purchasing power of currencies, gold already has decades of institutional behaviour supporting it.Central banks own the precious metal. Sovereign reserve managers understand it. And pension funds and macro investors know precisely where it belongs in their portfolio.Bitcoin is still not quite there yet in terms of achieving that status.Gold and Bitcoin appear to be hedging different risksIn terms of coining Bitcoin as "digital gold", perhaps the argument is too simplistic. I would argue that Bitcoin does not need to replace gold to succeed.In a world where investors are worried about government debt, geopolitical instability, and declining confidence in sovereign assets, gold looks much better suited in my view.For Bitcoin, the cryptocurrency can hold up in those same conditions. But for it to outshine gold, it needs to be in a time when we also see easier financial conditions and more liquidity in financial markets.And that is the kind of distinction that matters today.As mentioned, oil is pushing to $100, Treasury yields remain elevated near multi-year highs, and markets are debating on whether the Fed has to tighten policy by much more than what may be priced in. For a high-beta asset like Bitcoin, it's not necessarily the right mix of elements to thrive.That being said, I would not interpret gold's outperformance during the past two years as evidence that Bitcoin's monetary thesis has failed.It is more of a case of timing.As we're seeing with the market conditions today, gold looks to be the first line of defense when investors lose confidence in governments and sovereign debt begins to weaken. I would say for Bitcoin, perhaps its position is just sitting somewhere further along the transmission mechanism.If rising debt eventually forces policymakers to suppress yields, expand liquidity, and tolerate higher inflation, that is where Bitcoin's scarcity narrative might kick back into gear.But for now and the better part of the past year, the message from markets is clear. Investors are buying protection against fiscal and currency risk, it is just that they are choosing gold first.For Bitcoin, perhaps it will be part of what the next phase of the debasement trade may look like - just not now. This article was written by Justin Low at investinglive.com.