Rising U.S. federal debt, now at a record $39.7 trillion, fuels demand for bitcoin and gold as hedges against dollar devaluation.
U.S. federal debt reached a record $39.7 trillion, growing by approximately $7 billion daily, according to Treasury data. This surge has revived the ‘debasement trade,’ where investors buy limited-supply assets like bitcoin and gold to hedge against fiat currency devaluation.
The debt-to-GDP ratio, now exceeding 120%, has raised concerns about fiscal sustainability, limiting the Fed’s ability to cut rates aggressively in a recession. Analysts warn that fiscal dominance may force prolonged low rates and liquidity injections to manage refinancing.
Market observers note the trade, popular last year, is gaining traction again as debt accumulation outpaces traditional asset growth. Bitcoin and gold are seen as shelters amid expectations of prolonged dollar weakness.