Bitcoin (BTC) briefly surpassed the $110,000 price mark in the early hours of Oct. 23 as traders recalled its status as a hedge asset following the U.S. national debt hitting $38 trillion for the first time in history.
Related: What is Crypto? Cryptocurrency explained
The U.S. national debt is the total amount of money the federal government owes its creditors. It's funded through Treasury bills and other securities sold to investors, including large institutions and foreign governments.
Growing debt is viewed as an indication of potential inflation and the government's attempt to contain it by printing more fiat currency. But the fear of the debasement of the currency's value remains.
In such circumstances, traders tend to treat assets like Bitcoin as a hedge against inflation because it is scarce and decentralized as compared to government-printed fiat currency.
However, Bitcoin's surge above $110,000 remained rather short-lived this time as it failed to fight off the resistance zones.
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How tariff war, government shutdown, and Fed policy affect Bitcoin
Though BTC hit a new record high of $126,198.07 on Oct. 6, President Donald Trump's 100% tariff threat against China triggered a shocking crypto crash which had BTC plummeting to as low as $105,000.
Besides, the U.S. federal government is shut down as Republicans and Democrats remain deadlocked over health insurance policy.
As reported earlier , even the Federal Reserve recently lost access to key employment data ahead of the FOMC meeting on Oct. 28-29 which could make it more difficult for the bank to make decisions on interest rates. Uncertainty around rate policy could further fuel fears among the traders.
Though the crypto markets have grown a little more than resistant to volatility around Trump's tariff policy, it continues to remain a key factor to watch out for.
Note that it was in August that the national debt reached $37 trillion. So, it's the fastest accumulation of the next trillion dollars in debt outside of the COVID-19 pandemic, the Associated Press highlighted .
This story was originally reported by TheStreet on Oct 23, 2025, where it first appeared in the Business News section. Add TheStreet as a Preferred Source by clicking here.
