The US debt soared by 1 trillion dollars in 48 days. What does this mean for Bitcoin and the crypto market?

In just 48 days, the U.S. federal debt increased by 1 trillion dollars, bringing the total close to 38 trillion dollars. This unprecedented fiscal expansion is prompting investors to reassess the sustainability of the fiat system, while also reigniting the hedging narrative surrounding decentralized assets like Bitcoin and Ethereum.

Debt Soars: Increasing by 21 Billion Dollars Daily

According to the latest data, the United States has added 1 trillion dollars in debt in less than two months, which is equivalent to an increase of 21 billion dollars per day.

July deficit: $291 billion, the second-highest July deficit in history.

Estimated deficit for fiscal year 2025: $1.63 trillion, a year-on-year increase of 7.4%, expected to exceed $2 trillion.

Government spending accounts for 44% of GDP, which has only occurred during World War II and the 2008 financial crisis.

Tesla CEO Elon Musk has criticized the Trump administration's fiscal policies and warned that the "Great American Rescue Plan" will further increase the deficit. Now, data shows that this concern is coming true.

Expenditure crisis, not interest rate crisis

The analysis agency Kobeissi Letter pointed out: "This is a spending issue, not an interest rate issue."

Even if the Federal Reserve significantly lowers interest rates, the annual deficit will still be measured in trillions of dollars.

Fiscal revenue annual growth rate: only 2.5%

Expenditure growth rate: close to 10%

This means that the root of the problem lies in uncontrolled fiscal expansion, rather than merely monetary policy.

Bond Market and Macroeconomic Shocks

The bond market has issued a warning:

U.S. Treasury yields: Recent auction yields have exceeded 5%, a rarity in modern times.

Refinancing costs: Accelerate the increase of the deficit as interest rates rise.

Short-term impact: Rising yields may withdraw liquidity from risk assets, suppressing the stock market and the cryptocurrency market.

Long-term impact: Continuous deficits will weaken confidence in fiat, and historically, this situation often benefits hard assets such as Bitcoin and gold.

Bitcoin hedging narrative further strengthened

Bitcoin is often referred to as "digital gold," and this positioning becomes even more persuasive when the fiat system exhibits fiscal unsustainability:

Fixed supply: 21 million cap, clear anti-inflation properties.

Decentralization: not controlled by governments and central banks

Global circulation: cross-border, divisible, censorship-resistant

As institutional investors seek asset allocation options beyond U.S. Treasuries, stablecoins and tokenized government bonds have begun to absorb capital, and future liquidity overflow may drive a broader upward trend in the cryptocurrency market.

Key Observations for Future Trends

Is Congress controlling spending: The likelihood is low under political pressure in an election year.

Federal Reserve Interest Rate Policy: How to Balance Between Curbing Inflation and Debt Sustainability

Market confidence changes: If confidence in fiat further weakens, assets such as BTC and ETH may welcome a new round of capital inflow.

Conclusion

The U.S. debt soared by 1 trillion dollars in just 48 days, not only signaling a warning in fiscal data but also representing a significant test of confidence in the global capital markets. In the short term, rising yields may suppress risk assets, but in the long run, this fiscal unsustainability will further strengthen the safe-haven status of decentralized assets such as Bitcoin. For investors, this may be the moment to reassess asset allocation and increase the proportion of hard assets.