Indeed, I often think that cryptos should move in opposition to U.S. markets and fiat currencies.
Bitcoin not cryptos.
Obviously my thoughts don’t reflect the real world.
They do but what you are missing is the recession part. When you say "value [of fiat] dropping", that's inflation and that leads to more bitcoin adoption and its price going up.
But when we have recession, people tend to sell everything they have to get some money to spend and cover their cost of living. Hence bitcoin price dropping due to increased sell pressure.
So,…, what do you think BTC, and cryptos in general, will do in the event of a U.S. government default?
We have to see how that affects the economy on a large scale. AFAIK this has never happened before so we have nothing to speculate this based on.
I believe the default would lead to increased interest rates and a massive recession which could cause a bitcoin drop but at the same time that would be US economy falling apart and people would also look for an exit of the failing economy and this could translate into more investment into bitcoin instead which could lead to the biggest price rise in bitcoin history.
P.S. Another thing to keep an eye on is "when". The world order is changing and the world is decoupling itself from US economy to some extent. In a couple of years it won't matter as much as it does today or it mattered a couple of years ago if US economy falls apart. That means the effects on bitcoin (which is global) would be a lot smaller.
P.P.S. In any case The effects will be short term, in long term bitcoin will become more valuable as it is the only "money" that exists in a world filled with uncapped "currencies".