Bitcoin
Analysts Examine Bitcoin Response as US National Debt Surpasses $40 Trillion
BloFin researchers suggest the currency debasement trade is evolving as rising US fiscal debt and shifting Federal Reserve expectations reshape crypto market dynamics.
United States federal debt has exceeded $40 trillion alongside a budget deficit near 6% of gross domestic product and elevated borrowing costs. Despite these conditions, Bitcoin traded near $80,000, roughly 37% beneath the record high it set in 2025, prompting market participants to question the traditional narrative that scarce digital assets automatically gain value as sovereign debt expands.
According to analysis from BloFin, the debasement trade has shifted into a new phase where investors monitor government efforts to manage borrowing costs alongside monetary expansion. The report notes that the thesis lost momentum earlier in 2026 as Bitcoin dropped below $62,000 and precious metals fell, an unwind tied in part to the nomination of Kevin Warsh as Federal Reserve chair, which led markets to price in less aggressive balance-sheet expansion.
Market conditions shifted again in August when the 30-year US Treasury yield climbed to its highest level since 2007. Following that increase, the US Treasury announced plans to raise the maximum size of liquidity-support buybacks on selected 10-to-30-year bonds from $2 billion to at least $4 billion per operation.
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