Key Points
- Bitcoin [BTC] reached a new record high, despite the U.S. stock and bond market’s struggle with fiscal challenges.
- Experts suggest that BTC may become a safe-haven asset due to the U.S. fiscal debt.
Bitcoin [BTC] recently hit a record high of $111.8k, even as the U.S. bond and stock sectors grappled with fiscal issues.
On 21 May, investors turned their backs on the U.S 20-year Treasury bond, which led to a decrease in bond prices and a surge in yields to 5.1%.
The Impact on the Stock Market
The bond market’s turmoil spilled over into the stock market, causing the Nasdaq to drop by 1.4%, and the S&P 500 Index to fall by 1.6%. The U.S dollar Index (DXY) also dipped to a 2-week low of 99.5.
In contrast, BTC soared to a new high, a development Tushar Jain from crypto VC MultiCoin Capital interpreted as BTC evolving into a “risk-off’ asset.
U.S Debt and BTC
The increasing yield indicates that the U.S government will have to pay higher interest rates to borrow money for the next twenty years. Analysts have linked this development to concerning levels of fiscal spending and debt.
Currently, the U.S debt is at $36.22 trillion. However, President Donald Trump’s tax bill could lead to an additional $3 trillion – $5 trillion in spending.
This has sparked concerns about inflation and debt sustainability, as demonstrated by the weak demand for 20-year Treasury bonds.
Last week, Moody’s downgraded the U.S. credit rating, which further solidified BTC’s standing as a potential alternative safe-haven alongside gold.
BTC, which had previously decoupled from gold in Q1 2025 and followed U.S stocks, became correlated with gold again in Q2. Both assets rallied higher despite Trump’s tariff wars.
Now, as U.S fiscal issues worsen, Peter Schiff has encouraged his audience to buy more gold. This raises the question of which safe haven is likely to perform better in the short to mid-term.
The BTC/gold ratio, which measures Bitcoin’s price relative to gold, suggests that the crypto asset has a higher chance of outperforming gold.
Since April, BTC has outperformed gold by 33% after the indicator rebounded from the channel’s range-low.
If it reaches the range-high at 43, then BTC could see an additional 26% gain against gold.
