The fiscal mathematics of the United States are drifting toward a threshold that markets can no longer afford to ignore, and a level that, relative to GDP, hasn’t transpired since the last world war.
Washington’s latest budgetary outlook suggests the nation is on a trajectory to accumulate nearly $64 trillion in federal debt over the next decade.
The Congressional Budget Office’s (CBO) most recent decade-long outlook indicates a sustained increase in national obligations.
The CBO projects federal deficits will total approximately $1.9 trillion in fiscal year 2026. That gap is expected to widen toward $3.1 trillion by 2036.
These figures would increase public-sector debt from approximately 101% of gross domestic product in 2026 to about 120% by 2036. That level exceeds the peak debt burden seen in the aftermath of World War II.
For global investors, the absolute size of the debt pile is often less alarming than the cost of servicing it. The CBO data indicate that interest costs are on track to become one of the government’s dominant line items. Annual net interest payments are projected to reach around $2.1 trillion by the mid-2030s.
The projection comes as bearish sentiment against the US dollar reaches multi-year highs, creating a volatile macroeconomic backdrop that increasingly aligns with the long-term investment thesis for hard assets such as Bitcoin.
The bond market reality check
While headline numbers grab attention, the Treasury market trades on more immediate mechanics.
The Treasury Department’s “Debt to the Penny” dataset indicates that total US debt outstanding stood at approximately $38.65 trillion as of Feb. 12.
However, the path from this level to the projected $64 trillion depends heavily on how the marginal dollar is funded. Investors are increasingly focused on the compensation required to hold longer-dated Treasuries amid policy uncertainty.
This compensation is visible in the term premium, which is the extra yield investors demand to hold long-term bonds rather than rolling over short-term bills.
The term premium can remain suppressed for extended periods. However, when it rises, it pushes long-end yields higher even without a change in expected short-term policy rates.
This dynamic effectively increases the carrying cost of the national debt and tightens financial conditions across the economy.
This is because a rising term premium frames higher long-term yields not merely as a reflection of inflation expectations but as a risk premium charged for fiscal and regulatory uncertainty.
Notably, recent market commentary suggests this shift is underway. A Reuters survey conducted Feb. 5-11 found that strategists expect long-term Treasury yields to rise later in 2026.
Respondents cited persistent inflation, heavy debt issuance, and investor concerns about policy direction. Strategists also noted that reducing the Federal Reserve’s balance sheet becomes significantly more difficult to sustain in a world flooded with Treasury supply.
This presents a critical “macro fork” for the crypto market.
If the bond market demands a persistently higher term premium to absorb Treasury supply, the US government can still fund its operations, but only at the cost of higher borrowing rates for the entire economy.
Such a scenario raises the political incentive to seek relief through alternative measures. These could include lower interest rates, regulatory incentives for captive buyers to purchase debt, or greater tolerance for higher inflation.
These are the classic ingredients of “financial repression,” a playbook that investors have historically associated with the outperformance of hard assets.
Betting against the Dollar
The currency market is simultaneously signaling unease.
The vulnerability of the US dollar is increasingly framed not as a cyclical economic story but as a question of governance and credibility.
Over the past year, the US dollar recorded its worst performance since 2017, falling by more than 10% amid President Donald Trump’s policies.
Reuters reported that market strategists broadly expect the softness to persist throughout 2026, citing potential rate cuts and growing concerns about central bank independence.
Moreover, some investors had begun reassessing the dollar’s “automatic safe haven” status amid geopolitical and policy volatility.
This positioning confirms the shift in sentiment regarding the US dollar.
Indeed, the Financial Times reported that fund managers are taking their most bearish stance on the dollar in over a decade.
A Bank of America survey cited in the report showed the lowest exposure to the currency since at least 2012. The pessimism was attributed to policy unpredictability and rising geopolitical risk.
However, the shift away from the dollar in global reserves is nuanced.
IMF COFER data shows the dollar’s share of allocated global reserves stood at 56.92% in the third quarter of 2025 (down slightly from 57.08% in the second quarter).
This trajectory represents a slow drift rather than a collapse. It also implies that the dollar can be weak in trading markets while remaining dominant in the plumbing of global finance.
The diversification signal is most evident in the commodities market. The World Gold Council reports that central banks purchased 863 tonnes of gold in 2025.
While this figure is below the exceptional years in which purchases exceeded 1,000 tonnes, it remains well above the average recorded between 2010 and 2021.
This sustained buying reinforces the view that official-sector diversification is an ongoing structural trend.
Bitcoin’s macro pitch, three paths investors are weighing
In the current conversation, Bitcoin’s long-term bull case is often framed as a hedge against debasement and policy discretion.
However, the more precise question is which macro regime the market is entering, because each regime reshapes real rates, liquidity, and confidence differently.
One path is an orderly grind. In this case, deficits remain large, and issuance stays heavy, but inflation remains contained, and policy credibility holds. The dollar can drift lower without breaking the system, and Treasury auctions clear with modest concessions as the term premium rises gradually.
In that world, Bitcoin tends to trade mostly as a liquidity-sensitive risk asset. It can rally on debasement headlines, but it remains tethered to real yields and broader risk appetite.
A second path is a fiscal risk-premium regime. Investors demand materially more compensation to hold the long end. Term premiums rise, yields steepen, and higher financing costs begin to feed back into politics.
The narrative shifts from debt is big to debt is expensive. In that setup, scarce-asset trades have tended to perform better, as investors seek hedges that are not claims on a heavily indebted sovereign.
Gold’s official-sector bid supports that analogy. Bitcoin’s fixed supply becomes more compelling for investors who view fiscal dominance, meaning monetary policy constrained by debt service, as the direction of travel.
A third path is the dollar paradox. It is the twist that complicates any simple dollar-bear story in crypto.
A Bank for International Settlements working paper published in February finds that large inflows into dollar-backed stablecoins can lower 3-month Treasury bill yields by roughly 2.5 to 3.5 basis points for a 2-standard-deviation flow.
The implication is not that stablecoins solve the long-term debt problem. It is that stablecoin growth can create marginal demand for short-dated Treasuries.
That matters because crypto can simultaneously support Bitcoin’s hedge narrative while deepening dollarization through stablecoin rails.
Bitcoin and stablecoins can pull in different directions at the story level while reinforcing the same dollar-based settlement infrastructure at the system level.
What investors are watching next
For now, the $64 trillion projection has compressed years of drift into a single figure that would alarm the globe.
For crypto traders seeking to map these narratives into tradable signals, the tells tend to appear in rates and credibility.
The first set of signals sits in the rates complex. Investors will be watching for evidence that the market is charging a persistent risk premium to absorb long-end supply, and whether auction outcomes begin to reflect stress that persists beyond a single news cycle.
A sustained rise in term premium would indicate that uncertainty, not just inflation expectations, is being priced into long yields.
The second set of signals is credibility. Headlines around central-bank independence function like accelerants because they can turn a gradual debt story into a faster-moving FX story.
If credibility shocks pile up, the debate over debasement and hard assets tends to grow louder, even if the dollar remains dominant in reserves and settlement.
The third set is reserve drift and the gold bid. COFER data showing a slow decline from 57.08% in 2025Q2 to 56.92% in 2025Q3 supports the idea that de-dollarization is incremental. Central bank gold purchases of 863 tonnes in 2025 reinforce that official diversification is ongoing, even without a rupture.
The fourth set is stablecoin flows and bill demand. If stablecoin growth continues to anchor demand for short-dated Treasuries, it can soften the near-term funding narrative even as longer-term debt dynamics worsen.
That can buy time for the system while leaving the long end to carry the heavier burden of credibility and duration risk.
Put together, the setup helps explain why Bitcoin keeps showing up in the macro hedge playbook. It does not require a dollar collapse. It does not require a sudden change in the reserve regime.
It requires something more subtle and, for markets, more tradable, an increase in doubt about the future rules of money, paired with enough liquidity to keep the hedge trade alive