$40 Trillion Debt Load Doesn't Boost Bitcoin Prices as Expected

The US national debt has reached $40 trillion in August, a milestone that was expected to boost Bitcoin prices. However, the cryptocurrency's rally can be attributed to other factors such as liquidity and real yields rather than the debt milestone itself.

Bitcoin rallied by about 23% in late August, climbing from the low $60,000s into the high $70,000s. This was its sharpest three-day move since 2023. The dollar slipped, and gold rose alongside Bitcoin, leading some to conclude that unsustainable sovereign debt is bullish for a currency with a hard cap of 21 million coins.

However, Anders Bylund from The Motley Fool suggests that the evidence for this correlation between Bitcoin and gold is thin. He points out that the 90-day correlation between Bitcoin and gold hit a multi-year high in early September at just over 0.5, which is a weak-to-moderate statistical relationship.

Bylund also notes that Bitcoin behaves like a risk asset when it matters most, as seen during the COVID-19 crash in March 2020 and the inflation crunch of 2022, where it sold off more sharply than stocks. This contradicts the idea that Bitcoin is a safe-haven asset.