- US federal debt surpassed $40 trillion for the first time, reigniting debate over Bitcoin‘s role as a scarce non-sovereign asset.
- Interest costs on the debt have overtaken Medicare, becoming the second-largest federal expense behind Social Security.
- The Treasury announced it will double buybacks of long-term debt to calm a bond selloff that pushed yields to their highest levels since 2007.
- Bitcoin rallied to around $72,600, up 15% over the past week, amid the Treasury move and fiscal concerns.
- Analysts offer mixed views: some see the debt milestone as a catalyst for Bitcoin, while others point to broader financial conditions.
On Thursday, US federal debt topped $40 trillion for the first time, reigniting debate over whether mounting government borrowing strengthens Bitcoin’s case as a scarce, non-sovereign asset, Biden-2026-08-19/” rel=”nofollow noopener”>according to Reuters. Interest costs have also climbed, surpassing Medicare to become the federal government’s second-largest budget expense behind Social Security in the first 10 months of fiscal 2026, Reuters reported.
The debt milestone coincided with a Treasury move to calm a bond selloff that’s pushed long-term yields to their highest levels since 2007. Treasury Secretary Scott Bessent said Wednesday the department would double buybacks of 10- to 30-year debt to at least $4 billion per operation, initially pushing yields and the US dollar lower as Bitcoin and Gold rallied, Africa/dollar-hugs-three-month-lows-treasury-seeks-sooth-bond-market-2026-08-20/” rel=”nofollow noopener”>as reported by Reuters.
Bitcoin surged to around $72,600 on Thursday, up roughly 6% over 24 hours and 15% over the past week, according to CoinGecko data. While Bloomberg attributed elements of the rally to optimism over friendlier US crypto policy, as reported by Yahoo Finance, market analysts pointed to the Treasury and broader fiscal conditions as additional factors.
TrendLabs founder JC Parets said the Treasury’s move to increase purchases of longer-term government bonds changes the math for all assets. “If the market believes the government is going to push back against rapidly rising long-term rates, that can change the math for everything else investors own. Including Bitcoin,” he told TrendLabs.
However, Bitunix analyst Dean Chen offered a different view, saying the debt milestone is not inherently bullish for Bitcoin. Chen said persistent deficits and growing financing needs could eventually push borrowing costs higher again, and that Bitcoin’s near-term direction depends more on US dollar strength and long-term yields.
Analysts at DeFi protocol Yield Basis took a longer-term view, saying continued growth in US debt could strengthen demand for Bitcoin as a hedge against currency debasement because of its fixed supply and lack of a sovereign issuer. “As concerns around fiat currency debasement grow, it will definitely stand out more as a straightforward protective instrument,” they said.
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