US Debt Skyrockets $1 Trillion in 48 Days, Boosting Crypto’s Hedge Appeal

Key Points

• US Debt Skyrockets $1 Trillion in 48 Days, Boosting Crypto’s Hedge Appeal.
• Government spending is now at 44% of GDP, mirroring wartime levels.
• Experts say deficits will stay high even if interest rates drop.
• Rising debt strengthens the case for Bitcoin and crypto as fiscal hedges.

The United States has added $1 trillion in debt in just 48 days, bringing the national total close to $38 trillion. This historic spike in debt, roughly $21 billion per day, has set off alarm bells across financial sectors.

The sharp rise is fueling concerns about long-term fiscal sustainability and putting digital assets like Bitcoin, Ethereum, and DeFi protocols back in the spotlight as hedges against fiat instability.

Economists and analysts are pointing to excessive government spending, not just high interest rates, as the main culprit. In July alone, the government ran a $291 billion deficit, the second-largest July deficit in U.S. history. Total deficits for the fiscal year 2025 have reached $1.63 trillion, a 7.4% jump from the previous year.

And with spending now at 44% of GDP, levels not seen since World War II, the situation has escalated into what many are calling a spending crisis.

Even Elon Musk has weighed in, pointing fingers at the recently passed One Big Beautiful Bill Act, which further inflated an already bloated budget. And since August 11, the U.S. has tacked on an extra $200 billion, pushing debt closer to the symbolic $38 trillion mark.

What is happening here?

Over the last 48 days, the US Federal Debt has surged by +$1 TRILLION, or +$21 billion PER DAY.

Since August 11th, the US has added +$200 billion in debt.

Why is US government spending running at WW2 levels in a “strong” economy?

(a thread) pic.twitter.com/YsC7aRlQ1A

— The Kobeissi Letter (@KobeissiLetter) August 24, 2025

With tax revenues rising just 2.5% annually and spending increasing nearly 10% in the last month alone, the math is no longer adding up. As one analyst bluntly put it:

“It’s a spending issue, NOT an interest rate issue… It’s a spending crisis.”

For some nations like the Philippines, considering a Bitcoin reserve, America’s ballooning debt strengthens the argument for diversifying national treasuries with crypto holdings.

As rates rise, US debt is refinanced from rates at 1.5% to 3.0%+.

President Trump continues to call on the Fed to cut rates, which would reduce US interest expense.

But, this would come nowhere near resolving the crisis, as we explain in the next post.

It’s a spending crisis. pic.twitter.com/PMPRLPDVR7

— The Kobeissi Letter (@KobeissiLetter) August 24, 2025

What Rising US Debt Means for Crypto Investors

The bond market is already reacting. Treasury auctions are seeing yields above 5%, a level rarely seen in recent decades. This means that refinancing existing debt is becoming more expensive, putting even more strain on future budgets.

For crypto investors, this situation strengthens Bitcoin’s role as “digital gold.” In fact, many now see the entire crypto market, from Bitcoin to altcoins, as part of a larger defense strategy against fiscal mismanagement.

Why? Because as confidence in fiat currencies weakens, investors begin to look for hard-capped, decentralized assets that can’t be printed at will. Bitcoin’s fixed supply of 21 million coins looks more appealing every time the U.S. government prints or borrows another billion.

But, as President Trump said with his trade war, short-term pain is needed for long-term gain.

Simply put, on our current fiscal path, there is 100% certainty of US bankruptcy over the long-run.

This is why @ElonMusk formed DOGE and spoke out about the spending bill in June. pic.twitter.com/SGeJbRFWhq

— The Kobeissi Letter (@KobeissiLetter) August 24, 2025

“On our current fiscal path, there is 100% certainty of US bankruptcy over the long run,” stated analysts at the Kobeissi Letter.

This isn’t just about Bitcoin. Stablecoins and tokenized U.S. Treasuries are already seeing inflows. And as traditional investors start exploring alternatives to low-yielding government bonds, some of that capital may eventually flow into DeFi platforms, altcoins, and broader crypto assets.

For instance, when Coinbase listed the USD1 stablecoin, it highlighted the growing appetite for digital dollars in an era where traditional fiat trust is eroding.

Similarly, controversies like the CAMP Network airdrop show just how much volatility and speculation still drive parts of the ecosystem, a stark contrast to Bitcoin’s scarcity-driven thesis.

There’s also a political element. In an election year, it’s unlikely Congress will cut spending, making this a bipartisan issue with few near-term solutions. Meanwhile, the Federal Reserve must walk a tightrope,  balancing interest rate policy against growing debt pressures.

If rates remain high, the cost to refinance the debt skyrockets. If rates are cut too quickly, inflation could return, further eroding trust in fiat systems.

Either way, crypto stands to benefit, especially those projects built on scarcity, transparency, and decentralization.

Institutional Investors Are Quietly Watching

While headlines focus on inflation, interest rates, and political drama, institutional players are already adjusting their strategies. Hedge funds, sovereign wealth funds, and even some pension funds are beginning to consider how long they can rely on fiat-backed assets.

Tokenized assets and on-chain Treasuries have started drawing institutional capital as a safer yield alternative. But more importantly, the long-term credibility of U.S. debt is now in question, and that’s a seismic shift.

Institutions that once ignored or dismissed crypto are revisiting Bitcoin’s scarcity model. With governments showing little interest in fiscal discipline, even a small reallocation toward digital assets could inject billions into the market.

Moreover, altcoins with real-world use cases, such as those supporting decentralized finance (DeFi), cross-border payments, or tokenized real-world assets (RWAs), may see increased attention. As liquidity finds new homes, crypto could benefit from this structural macro trend.

Even large-scale corporate and blockchain investments, such as the BNB ecosystem’s $100M funding initiative, signal how aggressively capital is flowing into Web3 despite macro risks.

On the flip side, blowups like the YZY token crash highlight why institutions tread carefully when moving beyond Bitcoin and Ethereum.

From a strategic perspective, crypto’s volatility becomes less of a deterrent when compared to the long-term erosion of fiat purchasing power. Risk is no longer just about price swings; it’s about holding an asset class tied to a potentially unsustainable system.