US government debt has reached nearly $40 trillion, adding increased pressure on policymakers as they seek effective strategies to manage the growing fiscal burden. With this backdrop, Matt Hougan, Chief Investment Officer at Bitwise Asset Management, has proposed a simple investment principle: avoid endless debates and consider allocating to both artificial intelligence stocks and Bitcoin.
Strategic approach to debt uncertainty
Hougan, who oversees investment strategy for the leading crypto index fund provider, argues that this twin-track approach helps hedge portfolios against the two dominant macroeconomic scenarios that could shape the US economy’s future trajectory.
Hougan’s outlook centers on the broader fiscal plans attributed to Treasury Secretary Scott Bessent, who currently leads the US Department of the Treasury. Bessent faces the dual challenge of sustaining annual GDP growth above 3% while narrowing the federal deficit.
According to Hougan, the economic narrative is likely to unfold in one of two ways: explosive growth propelled by artificial intelligence and technology, or a scenario where inflation becomes the primary adjustment tool. Each path, he suggests, calls for exposure to a different type of asset.
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AAPLMini dictionary: Bitwise Asset Management is a US-based firm specializing in cryptocurrency investment products, including index funds and ETFs designed for institutional and retail investors.
If productivity booms, tech stocks could shine
One potential outcome, as outlined by Bessent, is that the US could “grow its way out” of the debt burden through rapid advances in productivity, fueled by widespread AI adoption. Hougan believes this would reward investors who position themselves in technology and semiconductor stocks.
Recent performances from chip and infrastructure companies support this view. Since the beginning of the year, Micron Technology shares have surged 224.97%, while Advanced Micro Devices (AMD) has posted a gain of 108.80%.
Short-term corrections have occurred, such as Broadcom’s 25.84% three-month decline and CrowdStrike’s 7.24% loss over one week. Hougan describes these setbacks as brief profit-taking episodes, not fundamental changes.
“If Bessent is right and we grow our way out of this, you desperately need to be long AI stocks,” Hougan said.
Should this scenario materialize, Hougan expects significant profits for investors with exposure to leading technology firms.
| Asset | YTD Change (%) | Recent Short-Term Change (%) |
|---|---|---|
| Micron Technology (MU) | +224.97 | N/A |
| AMD | +108.80 | N/A |
| Broadcom (AVGO) | N/A | -25.84 (3 months) |
| CrowdStrike (CRWD) | N/A | -7.24 (1 week) |
Bitcoin as a hedge against inflation risk
If, however, the US is unable to achieve the needed growth rates, Hougan expects the Treasury will rely on higher inflation to shrink the real value of its obligations. This could lead to volatility and further instability in the bond market, already prompting interventions by policymakers.
In such a scenario, Hougan identifies Bitcoin (BTC) as the primary hedge. The asset, now in its 15th year, experienced a challenging first half of 2026 as tighter monetary policy drove BTC down 33% year-to-date by July. Yet, as bond markets wobbled in August, Bitcoin staged a powerful rebound, narrowing its annual decline to just 10.91%.
Hougan highlights how the performance of AI stocks and Bitcoin have partially offset each other for investors. When Bitcoin struggled during the summer, semiconductor giants recorded strong gains. As August arrived and AI stocks corrected, Bitcoin’s rally helped stabilize portfolios.
“If Bessent is wrong and we get inflation, you need Bitcoin. But if you want to win either way, own both,” Hougan concluded.
In an environment of record uncertainty, Hougan maintains that holding both assets is a logical response to the US government’s ongoing fiscal dilemma.
