US Debt Surpasses $40 Trillion, Sparking Rotation into Bitcoin and Gold
The US government's debt has surpassed $40 trillion, prompting investors to seek safer havens. The Treasury Department responded by announcing extensive long-term debt buybacks.
Treasury prices have fallen, and the dollar is weakening as a result. This has led to increased demand for Bitcoin and gold, with Bitcoin climbing 23% in late August to over $77,000 and gold prices rising in tandem.
Options market data shows that investors are overwhelmingly bullish on gold, with a 5:1 ratio of calls to puts on SPDR Gold Shares. In contrast, Bitcoin ETF options show a more balanced distribution of bets.
Recent research suggests that blending both assets can provide better risk-adjusted returns. A study by Bitwise found that a 15% allocation split between Bitcoin and gold achieved a Sharpe ratio of 0.679, nearly tripling the Sharpe ratio of a traditional 60/40 stock-and-bond portfolio.