U.S. national debt approaches $40 trillion, with investors turning to Bitcoin and gold as safe-haven assets, betting on the U.S. dollar’s depreciation.

As U.S. government debt continues to surge, investors are refocusing on scarce assets like Bitcoin and gold as hedges against the declining purchasing power of the U.S. dollar. Data from the U.S. Treasury’s “Debt to the Penny” shows that as of last Friday, U.S. federal debt has hit a record $39.7 trillion. Market observers point out that U.S. government debt is currently increasing by around $70 billion daily, an incremental volume that exceeds most crypto assets when calculated by market capitalization. The founder of LondonCryptoClub stated that the pace of U.S. debt growth is driving so-called “currency devaluation trades,” in which investors buy assets with limited supplies—such as gold and Bitcoin—to hedge against long-term fiat currency depreciation risks. The firm argues that in an environment of “fiscal dominance,” Federal Reserve policy may be influenced by the government’s financing needs, requiring interest rates to stay low and continuous liquidity provision to support debt refinancing. Apollo chief economist Torsten Slok previously warned that U.S. debt as a share of GDP has exceeded 120%, leaving limited fiscal stimulus room in the event of a future economic recession. Additionally, the Federal Reserve will struggle to cut interest rates sharply as it did in the past, as such moves could exacerbate inflation and push down Treasury yields, hampering government financing. Currently, Bitcoin’s price holds above $65,000, supported by easing U.S.-Iran tensions and falling oil prices, which have lifted market risk appetite. Meanwhile, Ethereum has outperformed Bitcoin recently, with the ETH/BTC exchange rate breaking above its 100-day and 200-day moving averages, leading market participants to believe that altcoin momentum may be building. However, analysts note that since its launch in 2010, Bitcoin’s price movements have resembled those of tech stocks more than traditional safe-haven assets, leaving its safe-haven status a subject of debate.