US Federal Debt Tops $40 Trillion, Renewing Debate Over Bitcoin as a Fiat Hedge

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U.S. federal debt has surpassed $40 trillion for the first time, renewing debate over whether Bitcoin can serve as a hedge against the erosion of fiat currencies.

Cointelegraph reported on August 20 that U.S. federal debt had crossed the $40 trillion mark for the first time. Reuters reported that, in the first 10 months of fiscal 2026, U.S. interest costs exceeded Medicare spending, making them the government’s second-largest expense after Social Security.

As debt climbed, the Treasury moved to stabilize the long-term bond market. Treasury Secretary Scott Bessent said the department would double its purchases of long-dated Treasuries, buying at least $4 billion per operation in bonds with maturities of 10 to 30 years.

After the announcement, long-term Treasury yields and the dollar briefly declined, while Bitcoin and gold both rose. CoinGecko data showed Bitcoin trading near $72,600 as of the morning of August 20, up about 6% from 24 hours earlier and about 15% from a week earlier.

Market opinion is divided on whether the growing U.S. fiscal burden will be a long-term positive for Bitcoin. JC Parets, founder of TrendLabs, said that if markets come to trust the government’s willingness to restrain long-term yields, investors may rethink how they value all the assets they hold, including Bitcoin.