U.S fiscal crisis boosts Bitcoin’s appeal – Is it finally the new safe haven?
Here's why a market expert is expecting the U.S. debt crisis to transform BTC into long-term risk-off, safe-haven asset.
- Bitcoin tagged a new record high, despite a decline in U.S stock and bond markets
- Experts believe BTC may become a risk-off, safe-haven asset amid U.S. fiscal debt
Bitcoin [BTC] surged to a record high of $111.8k while traditional markets – U.S. bond and stock sectors – struggled with fiscal challenges. In fact, on 21 May, investors shunned the U.S 20-year Treasury bond, dragging bond prices and spiking yields to 5.1%.
The bond market rout crept into the stock market, tanking the Nasdaq by 1.4%, while the S&P 500 Index slipped by 1.6%. The U.S dollar Index (DXY) also dropped to a 2-week low of 99.5.
On the contrary, BTC mooned to a new high, a move Tushar Jain of crypto VC MultiCoin Capital viewed as becoming a “risk-off’ asset.” He said,
“We are watching BTC transform from a risk-on asset to a risk-off asset. Today, we saw further proof that the government cannot cut the budget deficit. The market reacted by selling US treasuries, selling USD, selling equities, and buying BTC.”
Will U.S debt fuel BTC?
The rising yield meant the U.S government would pay higher interest rates to borrow money for two decades – An update analysts linked to worrying fiscal spending and debt.
At the time of writing, the U.S debt stood at $36.22 trillion. However, President Donald Trump’s “big beautiful” tax bill would lead to an extra $3 trillion – $5 trillion in spending.
This has raised concerns about inflation and debt sustainability, as seen by the weak demand for 20-year Treasury bonds.
In fact, Moody’s downgraded the country’s credit rating last week, reinforcing BTC’s position as an alternative safe-haven alongside gold.
Bitcoin also decoupled from gold in Q1 2025, and followed U.S stocks, meaning it was a “risk-on” asset. However, in Q2, it became correlated with gold again, and both rallied higher despite Trump’s tariff wars.
Now, with U.S fiscal woes worsening, Peter Schiff has urged his audience to grab more gold. Hence, the question – Which safe haven has better chances of outperformance in the short to mid-term?
According to the BTC/gold ratio, an indicator that tracks Bitcoin’s price relative to gold, the crypto asset has higher odds of outpacing gold.
Since April, BTC has eclipsed gold by 33% after the indicator bounced from the channel’s range-low.
If it extends to the range-high at 43, then BTC would record extra 26% gains against gold.
