Forecast Trend Report by Period
U.S. federal debt has surpassed $40 trillion for the first time, renewing debate over whether Bitcoin can serve as a hedge against the erosion of fiat currencies.
Cointelegraph reported on August 20 that U.S. federal debt had crossed the $40 trillion mark for the first time. Reuters reported that, in the first 10 months of fiscal 2026, U.S. interest costs exceeded Medicare spending, making them the government’s second-largest expense after Social Security.
As debt climbed, the Treasury moved to stabilize the long-term bond market. Treasury Secretary Scott Bessent said the department would double its purchases of long-dated Treasuries, buying at least $4 billion per operation in bonds with maturities of 10 to 30 years.
After the announcement, long-term Treasury yields and the dollar briefly declined, while Bitcoin and gold both rose. CoinGecko data showed Bitcoin trading near $72,600 as of the morning of August 20, up about 6% from 24 hours earlier and about 15% from a week earlier.
Market opinion is divided on whether the growing U.S. fiscal burden will be a long-term positive for Bitcoin. JC Parets, founder of TrendLabs, said that if markets come to trust the government’s willingness to restrain long-term yields, investors may rethink how they value all the assets they hold, including Bitcoin.
Dean Chen, an analyst at Bitunix, took the opposite view. The debt milestone itself is not inherently bullish for Bitcoin, he said. Treasury purchases temporarily lowered long-term yields and weakened the dollar, but chronic fiscal deficits and rising borrowing demand could ultimately push yields higher again.
Chen said Bitcoin’s short-term direction will depend more on macroeconomic factors such as dollar strength, long-term Treasury yields and inflation expectations than on the size of U.S. debt.
Some analysts also argue that Bitcoin’s scarcity could draw renewed attention if U.S. fiscal deterioration persists. Analysts at DeFi protocol Yield Basis said that if U.S. debt keeps rising, demand for Bitcoin as a hedge against currency debasement could strengthen because of its fixed supply and non-sovereign issuance structure.
They added that it remains unclear whether Bitcoin will establish itself as a new reserve asset. Still, if concern over fiat-currency debasement deepens, Bitcoin could attract more attention alongside traditional hedges such as gold.
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