Is America's $40 Trillion Debt Load Bullish or Bearish For Bitcoin? The Answer Might Surprise You.
Rising debt is supposed to be rocket fuel for Bitcoin. The data tells a different story.
Overview
Many crypto investors see opportunity in rising U.S. national debt. The so-called debasement trade idea suggests that stable assets will outperform if the government allows inflation to run high. More debt means more money in circulation, right? So the dollar weakens, boosting the value of inflation hedges such as gold, bonds, real estate, and Bitcoin (CRYPTO: BTC). That's the popular theory.
This thesis is being tested in the real world. The national debt hit $40 trillion in August, up from $36 trillion a year earlier and $19 trillion a decade ago. It took less than five months to climb the last trillion.
Details
Bitcoin rallied roughly 23% in late August, climbing from the low $60,000s into the high $70,000s. That was the sharpest three-day move since 2023. Gold rose alongside it. The dollar slipped. Headlines followed the Bitcoin price rush, and the conclusion was nearly unanimous: Unsustainable sovereign debt is bullish for a currency with a hard cap of 21 million coins.
Source
Originally published at www.fool.com.