US Debt Tops $40T: What It Means for Bitcoin
The US federal debt has surpassed $40 trillion for the first time, sparking debate over its potential impact on Bitcoin's value. The milestone coincided with a Treasury move to calm a bond selloff by doubling buybacks of 10- to 30-year debt, which initially pushed yields and the US dollar lower as Bitcoin (BTC) and gold rallied.
Bitcoin is trading around $72,600 on Thursday morning, up roughly 6% over the past 24 hours and 15% over the past week. Market analysts pointed to the Treasury's move as a potential catalyst for Bitcoin's rally, with some attributing it to optimism over friendlier US crypto policy.
However, bond-market participants viewed the Treasury's move as an effort to push back against rising long-term rates. JC Parets, founder and chartered market technician at TrendLabs, said that if the market believes the government is going to push back against rapidly rising long-term rates, it can change the math for everything else investors own, including Bitcoin.
The growth in US debt has also led some analysts to take a longer-term view, with Yield Basis predicting that continued growth could strengthen demand for Bitcoin as a hedge against currency debasement due to its fixed supply and lack of a sovereign issuer. However, others caution that persistent deficits and growing financing needs could eventually push borrowing costs higher again.