As US federal debt tops $40 trillion for the first time, there is renewed debate over whether mounting government borrowing could strengthen Bitcoins case as a scarce, non-sovereign asset.
Interest costs have also climbed, surpassing Medicare to become the federal governments second-largest budget expense behind Social Security in the first 10 months of fiscal 2026, according to Reuters.
The debt milestone coincided with a Treasury move to calm a bond selloff thats pushed long-term yields to their highest levels since 2007. Treasury Secretary Scott Bessent said Wednesday the department would double buybacks of 10- to 30-year debt to at least $4 billion per operation, initially pushing yields and the US dollar lower as Bitcoin (BTC) and gold rallied.
Bitcoin is continuing to surge, trading around $72,600 on Thursday morning, up roughly 6% over the past 24 hours and 15% over the past week, according to CoinGecko data.
Source: Yahoo Finance
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Treasury buybacks add another potential Bitcoin catalyst
While Bloomberg and others attributed elements of Bitcoin‘s rally to optimism over friendlier US crypto policy following President Donald Trump’s meeting with industry executives at the White House on Wednesday, market analysts pointed to the Treasury and broader fiscal conditions as additional factors.
TrendLabs founder and chartered market technician JC Parets pointed to the Treasurys move to increase purchases of longer-term government bonds, which he said bond-market participants viewed as an effort to push back against rising long-term rates. Parets said:
If the market believes the government is going to push back against rapidly rising long-term rates, that can change the math for everything else investors own. Including Bitcoin.
Bitunix analyst Dean Chen offered another view, saying that the debt milestone is not inherently bullish for Bitcoin. While Treasury buybacks temporarily lowered long-term yields and weakened the dollar, persistent deficits and growing financing needs could eventually push borrowing costs higher again.
Chen said Bitcoins near-term direction will depend more on broader financial conditions, pointing to US dollar strength, long-term Treasury yields and inflation expectations as key variables to watch.
Analysts at DeFi protocol Yield Basis took a longer-term view, telling Cointelegraph that continued growth in US debt could strengthen demand for Bitcoin as a hedge against currency debasement because of its fixed supply and lack of a sovereign issuer. They said:
Whether it will actually become a new reserve asset remains to be seen, but as concerns around fiat currency debasement grow, it will definitely stand out more as a straightforward protective instrument (alongside more traditional assets like gold).
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