As the U.S. national debt approaches the $40 trillion mark, the Treasury Department is seeking strategies to manage this colossal burden. Bitwise Chief Investment Officer Matt Hougan suggests a dual-protection strategy for investors that involves holding both AI-focused tech stocks and Bitcoin. Hougan believes this balanced approach is well-suited to address the divergent economic outcomes the U.S. could face.
Will Technology Drive Economic Growth?
In one scenario, shaped by U.S. Treasury Secretary Scott Bessent’s goal of boosting growth while reducing the budget deficit, the focus is on the rise of AI-driven efficiency. This improvement is expected to bolster the economy, mitigating debt pressures through growth. Tech companies specializing in chips, data processing, and infrastructure could dominate in this environment.
“If Bessent’s growth strategy prevails, a long position in AI stocks becomes essential,” says Hougan.
Supporting this view, some technology stocks have seen remarkable performance since the start of the year. For example, Micron Technology’s shares soared by 224.97%, while AMD’s stock increased by 108.80%. In contrast, Broadcom’s shares fell by 25.84% over three months, and CrowdStrike saw a weekly drop of 7.24%, attributed mainly to profit-taking.
Can Bitcoin Hedge Against Inflation?
The second scenario involves managing debt through rising inflation if economic growth fails to accelerate sufficiently. Hougan argues that recent volatility in the bond market indicates that this risk cannot be overlooked, positioning Bitcoin as a fundamental crisis hedge.
Bitcoin faced a tough first half in 2026, declining 33% by July under tight monetary policy conditions, hitting a local low. However, increased bond market fluctuations in August prompted a V-shaped recovery, recouping much of the loss, reducing the annual decline to 10.91%.
Why Hold Both Assets?
Hougan notes that during the summer, these two assets balanced each other in portfolios. As Bitcoin plummeted, semiconductor stock gains provided cushioning. Conversely, when AI stock corrections emerged in late August, Bitcoin’s rapid recovery limited overall losses.
“In face of high inflation, Bitcoin is essential. To remain strong in both scenarios, hold both assets,” Hougan emphasizes.
Economic uncertainty in the U.S. reaches historic levels with Hougan advising against relying on a single outcome. Instead, he touts a strategy of maintaining both AI stocks and Bitcoin in the portfolio to offer a versatile defense.
- AI stocks could lead in a growth-driven economy, especially in sectors like chips and data processing.
- Bitcoin serves as a hedge during inflationary periods, offering crisis protection.
- The balancing effect of AI and Bitcoin can provide resilience amid economic unpredictability.
Now, amid one of the most unpredictable periods in U.S. economic history, adopting a combined strategy of AI stocks and Bitcoin can offer investors an adaptive and robust defense against contrasting economic futures.
