US federal debt has hit a record $39.7 trillion, fueling a flight into bitcoin, gold and stablecoins. Between rate dynamics, regulatory shifts and Washington’s « crypto-mercantilism », the greenback’s status as a safe haven is being challenged by a new generation of investors.
🔑 Key takeaways
- US federal debt reaches $39.7T, with $7B added every day
- Debt service: $24B/week, $939B over 9 months (above the Defense budget)
- Debt-to-GDP ratio above 120%; Penn Wharton model flags 210% as the unsustainability threshold
- BTC mechanically gains 3%/yr vs USD if inflation runs at 5% and growth at 2%
- Genius Act passed July 2025: stablecoins become a private funding channel for US debt
A spiraling debt, vanishing fiscal buffers
The numbers are dizzying. According to US Treasury data relayed by The Kobeissi Letter, the federal debt grew by $3.2 trillion over the past twelve months and by $16.3 trillion since 2020 — an average of $209 billion per month. Every day, roughly $7 billion is added to the tally — an amount that, converted into market capitalization, would rank a cryptocurrency 16th globally.
This pace weighs directly on the federal budget. The Treasury now pays $24 billion per week in debt service, up 13% year-over-year. Over the first nine months of fiscal year 2026, cumulative interest costs hit $939 billion, exceeding the Department of Defense budget.
« The US has never entered a recession with such minimal fiscal headroom. »
Torsten Slok, Chief Economist at Apollo
The debt-to-GDP ratio is above 120%, leaving the Fed little room to cut rates without reigniting inflation or crushing bond yields. Yet the government must issue more debt to finance its deficits, at ever more attractive yields. The Penn Wharton model estimates that beyond 210% of GDP, the trajectory becomes mathematically unsustainable. Their projections put that ceiling as early as 2045 in an adverse scenario — bringing forward the political reckoning markets are already pricing in.
| Period | US debt change |
|---|---|
| Past 12 months | +$3.2T |
| Since 2020 | +$16.3T |
| Monthly average since 2020 | $209B |
| Weekly debt service (2026) | $24B (+13% YoY) |
| Cumulative interest, 9 months FY2026 | $939B |
Bitcoin, gold and stablecoins: the new refuge trilogy
Against this backdrop, several voices are calling for protection against the slow devaluation of the greenback. The founders of LondonCryptoClub told CoinDesk: « It’s the world of fiscal dominance that ultimately dictates Fed policy. Rates will have to be kept artificially low and liquidity provided to help finance the refinancing cycle. » They added: « The debasement narrative was popular last year but went quiet. Yet it is ready to kick into overdrive! »
Robert Kiyosaki, author of « Rich Dad Poor Dad », echoes this view to his followers. He points out that US debt stood at roughly $9.5 trillion in 2008, just before the global financial crisis, and has more than quadrupled since. His personal playbook: gold since 1971, bitcoin since 2012, ethereum since 2022. He keeps his metals in Swiss vaults outside Switzerland, citing historical episodes where Washington banned private gold ownership.
A mathematical model developed by researchers at Liverpool and Tufts universities formalizes the digital gold thesis. If inflation persistently exceeds real growth (5% vs 2%), bitcoin’s price mechanically gains 3% per year against the dollar, purely from monetary dilution. European flows confirm the trend: physical gold ETCs and bitcoin ETPs in the EMEA region have recorded net inflows year-to-date. Bitcoin ETPs show $375 million of YTD inflows, according to Bloomberg data cited by Invesco.
« Since 1965 I’ve accumulated silver in physical form. Since 1971 I’ve kept physical gold. Since 2012 I’ve accumulated bitcoin. Since 2022 I’ve invested in ethereum. »
Robert Kiyosaki, author of « Rich Dad Poor Dad »
Central banks, meanwhile, have been net gold buyers for fifteen consecutive years. The United States still holds the world’s largest national reserves (8,133 tonnes), but they are booked on the Fed’s balance sheet at $42.22 per ounce — the price set in February 1973. The book value is just $11 billion, versus $860 billion at current market prices. A revaluation would free up $850 billion straight to the Treasury, but at the cost of a severe inflationary signal.
America’s homegrown « crypto-mercantilism »
Countering this flight into hard assets, Washington is pursuing an aggressive monetary strategy. In July 2025, Congress passed the Genius Act, the first federal law regulating stablecoins. The text defines a payment stablecoin as a digital token fully backed by liquid assets (bank deposits, Treasury bills). Only licensed institutions can issue them.
Total outstanding stablecoins reach $250–260 billion: Tether (USDT) accounts for more than $160 billion, USDC around $60 billion. Issuers buy massive amounts of Treasury bills to back their reserves, creating a new private funding channel for public debt. US banks and groups like Meta are preparing their own tokens; Mastercard has worked with Circle, USDC’s issuer, since 2021.
« A digital bank run — a mass redemption of stablecoins for dollars at the first sign of issuer stress — would force the liquidation of Treasury bills held in reserve. Massive bailouts could fall on taxpayers. »
Jean Tirole, economist
On the European side, the ECB has raised concerns about a loss of monetary sovereignty if dollar-denominated stablecoins become widespread. EURC, the euro stablecoin issued by Circle, represents €170–200 million, versus more than $160 billion for USDT. The digital euro is presented as the public counterweight, both to protect monetary sovereignty and to provide a trusted option for future payments.
Near term: caution regains the upper hand
Regulatory headwinds and a stronger dollar have cooled appetite among large investors. According to Henry Allen, analyst at Deutsche Bank: « Since mid-October, markets have been struggling, and it’s particularly obvious for risk assets like bitcoin. »
Bitcoin ETFs saw outflows of up to $1.8 billion in a single week, confirms Rachael Lucas at BTC Markets. Stephen Innes at SPI AM notes that the probability of a Fed rate cut in December has slipped below 50%. The dollar firmed modestly against the euro, at 1.1606.
Bitcoin had nonetheless hit an all-time high of $126,251 in early October 2025, before a « mini-crash » on October 10 wiped out $20 billion in crypto market cap following Donald Trump’s trade announcements against China. Today, the cryptocurrency trades just above $65,000, supported by an overnight drop in oil prices after the US and Iran suspended hostilities. Ether is outperforming BTC and flirting with $1,950. The ETH/BTC ratio has crossed above its 100- and 200-day simple moving averages for the first time since the start of this year’s bear market — a setup that hints at a potential altcoin rally ahead.
« Since its inception in 2010, BTC has largely behaved like a tech stock rather than a safe-haven investment. »
LondonCryptoClub founders
Conclusion
Two opposing forces are pulling at the dollar. On one side, the fiscal mechanics — $7 billion of new debt per day, $24 billion in weekly interest payments, a debt-to-GDP ratio hurtling toward the 210% threshold — structurally push toward devaluation and feed demand for bitcoin, gold and stablecoins. On the other, Washington’s « crypto-mercantilism » — via the Genius Act and the rise of dollar-backed stablecoins — locks the greenback at the heart of the crypto ecosystem. In the short term, BTC is digesting risk-off flows; over the medium term, the digital gold thesis retains its mathematical foundations. The political question remains: who ultimately pays the bill for a debt that only refinances itself by getting bigger?
Sources
- CoinDesk — Ballooning US debt sends investors to bitcoin and gold
- Allnews — Dollar mistrust grows as gold and bitcoin step in
- Yahoo Finance — Robert Kiyosaki shares a key revelation
- Cryptoast — Bitcoin, US debt and the shield against monetary devaluation
- BFM TV Crypto — Dollar firms up, investors stay cautious on bitcoin
- The Conversation — America’s crypto-mercantilism
This article is for informational and educational purposes only. It does not constitute investment advice. Do your own research (DYOR) before making any decision.
