US Debt Tops $40 Trillion, Fueling Debate Over Bitcoin's Role in Fiscal Storm

The U.S. federal debt has surpassed $40 trillion for the first time, rekindling debate about whether worsening fiscal dynamics strengthen Bitcoin's narrative as a scarce, non-sovereign asset.

Treasury yields have surged to their highest levels since 2007, while interest costs have risen sharply, surpassing Medicare to become 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, which some analysts believe may push back against rapidly rising long-term rates and change the valuation assumptions for a wide range of holdings, including Bitcoin.

However, other analysts caution that Treasury buybacks may lower long-term yields temporarily and weaken the dollar, but persistent deficits and continued build-up of financing needs could still push borrowing costs higher again over time.