$40 Trillion Debt Milestone Reignites Bitcoin Risk vs Hedge Debate
The US federal debt has surpassed $40 trillion for the first time, sparking renewed debate about whether worsening fiscal dynamics strengthen Bitcoin's appeal as a scarce, non-sovereign asset.
Treasury yields have surged to their highest levels since 2007, with interest costs becoming the federal government's second-largest budget expense behind Social Security in the first 10 months of fiscal 2026.
The Treasury has moved to address stress in the bond market by increasing buybacks of 10- to 30-year debt to at least $4 billion per operation, aiming to blunt rising long-term yields.
Bitcoin was trading around $72,600 on Thursday morning, up about 6% over the previous 24 hours and roughly 15% over the past week, with some analysts attributing parts of its surge to optimism around friendlier US crypto policy following President Donald Trump's meeting with industry executives at the White House.
However, other analysts argue that Treasury buybacks may lower long-term yields temporarily but still push borrowing costs higher again over time due to persistent deficits and financing needs.