Ballooning U.S. debt sends investors to bitcoin, gold to shelter from dollar devaluation
CoinDesk 2026-07-27 11:15:00
Context: The US government's growing debt, now at an all-time high of $39.7 trillion, is driving investors to assets like bitcoin and gold as a hedge against potential dollar devaluation. This trend, known as the "debasement trade," is gaining traction as the government's debt continues to balloon, with some observers warning that it could have significant implications for the economy and financial markets. The increasing debt has raised concerns about the government's ability to respond to a recession, with some economists arguing that it leaves little room for fiscal maneuvering.
Key Facts
- The US federal debt has reached an all-time high of $39.7 trillion, according to the Treasury's Debt to the Penny dataset, with some observers noting that the government's debt is growing by roughly $7 billion each day.
- If the US government's debt growth were a market capitalization, it would rank as the 16th-largest cryptocurrency, ahead of privacy coins like XMR and other tokens.
- The founders of the crypto newsletter service LondonCryptoClub believe that the pace of debt growth supports the "debasement trade," a bet that fiat currency will fall in value, and that assets like gold and bitcoin will benefit from the devaluation.
- Apollo chief economist Torsten Slok has warned that the US debt-to-GDP ratio of over 120% means there is little room to spend more money should a recession arrive, and that the Fed cannot cut interest rates as aggressively as during previous recessions.
- Bitcoin is currently trading just above $65,000, with ether outperforming BTC and hinting at a potential altcoin rally ahead, as investors seek protection from potential dollar debasement.