BTC as a hedge against US Debt

BTC a hedge against US Debt ?

Ok, you do not wake up in the morning with an idea of “Oh the US debt is rising incredibly, let’s buy some Bitcoin”… Though my thought was, Yes, actually for many, BTC esp. on the institutional side has become part of a diversification strategy which aims at hedging inflation risk on top of hard-assets like gold. (US Debt is printed out of thin air (through the issuance of government bonds bought by the Fed, which pumps money supply, which pumps inflation).

So given that BTC is driven strongly by the US economy and its actors I was wondering how BTC correlates with the rise of US government debt which has skyrocketed to $34 Trillion to date.

So I ran a quick correlation analysis between US-Debt and BTC prices since 2010 to 2024 (Scenario 1). In Scenario 2 and 3, I assumed that the effects of adapting BTC as an inflation hedge comes at a delay of 1 yr. (Masses slowly understand its positive effects). For 2025 I forecasted a price of BTC $120k and $200k, respectively. Turns out, that no matter what correlation between the two, it is super robustly strongly correlated and if BTC hits 200k in 2025 it is almost perfectly correlated.

I think we could also make the case given that US-Debt is way bigger than BTC in “market cap” (numerically in value and current societal impact), it can be considered the independent variable, with BTC being the dependent variable.

Conclusion: US-Debt will rise, and so will BTC. Given historical high correlation between the two (2010–24), it is more likely that we see BTC go up in the long-term, given that we can expect US-Debt to continue to explode upwards.

**Weaknesses of this analysis:1. Only 15 data points (2010 to 2024/25), standard deviation is quite sizable but also low with the 200k BTC case for 20252. Speculative assumptions on 2025 data. BTC might crash, then the analysis falls apart.3. Year-end data is used, probably log-data is better4. Correlation is not causation, so the data does not tell whether BTC reacts to increases in US Debt and vice versa5. p-values probably react allergically if only some values are changed given n is small6. The model assumes US debt to rise to 37 Trillion in 2025. We do not know the exact figure obviously.