From Yahoo Finance · · 1m 20s
America's $40 Trillion Debt and Bitcoin
U.S. debt hitting $40 trillion doesn't boost or hurt Bitcoin.
In brief
U.S. debt hitting $40 trillion doesn't boost or hurt Bitcoin. The $40 trillion U.S. debt milestone has minimal impact on Bitcoin prices as liquidity and real yields drove recent gains. Originally reported by Yahoo Finance.
U.S. debt hits $40 trillion
The national debt reached $40 trillion in August, up from $36 trillion a year earlier and $19 trillion a decade ago.
Debasement trade theory
Crypto investors believe rising U.S. debt boosts Bitcoin as more money circulates, weakening the dollar and strengthening inflation hedges.
Bitcoin rallies in August
Bitcoin climbed 23% in late August, reaching high $70,000s after a sharp three-day move since 2023.
Weak correlation with gold
The 90-day correlation between Bitcoin and gold hit a multi-year high of 0.5, but this is a weak statistical relationship.
Bitcoin behaves like risk asset
Bitcoin sold off more sharply than stocks during the 2020 and 2022 crises, showing it's a risk asset when markets need liquidity.
Real yields drive Bitcoin rally
Liquidity and real yields, not U.S. debt, drove Bitcoin's August rally as Treasury bonds offered safer returns.
Debt milestone takes credit
The $40 trillion debt milestone appeared late in the Bitcoin rally, taking credit for gains that were actually driven by liquidity and real yields.
The key point
The $40 trillion U.S. debt milestone has minimal impact on Bitcoin prices as liquidity and real yields drove recent gains.
