Grayscale Warns Unchecked U.S. Debt Could Push Investors Toward BTC and ETH

The U.S. public debt has surpassed $40 trillion for the first time, and long-term real Treasury yields have climbed to nearly 3%. Grayscale warns that this could push investors toward Bitcoin (BTC), Ethereum (ETH), and Zcash (ZEC) due to a 'debasement trade'. The firm believes unchecked government borrowing can weaken credibility in fiat currencies and increase demand for alternative stores of value.

Grayscale noted that the U.S. Treasury recently announced larger buybacks of long-maturity notes and bonds, which retire securities after acquisition and reduce the risk-adjusted supply of Treasury debt. However, this policy addresses rising yields without resolving structural budget deficits, driving continued government borrowing.

Ray Dalio separately warned that the United States could face a major debt crisis within several years, comparing it to an economic heart attack. He estimated the crisis could arrive in three years, give or take two, without a policy change.