U.S. Treasuries surge to a record high of $39.7 trillion! A “devaluation trade” is sparked, triggering a frenzy as investors rush to buy Bitcoin and gold

U.S. government debt is expanding out of control like a snowball rolling downhill, triggering deep concerns on Wall Street about the value of fiat currencies. According to CoinDesk, U.S. federal debt has hit a new all-time high of $39.7 trillion, increasing by an average of $7 billion every day. Analysts warn that this level of debt will constrain the Federal Reserve’s room to cut rates in response to an upcoming economic recession, and will push market funds to shift faster toward Bitcoin (BTC) and gold, reigniting the “debasement trade” craze aimed at hedging against dollar depreciation.
(Background: Tech stocks face the “triple squeeze” from oil prices, U.S. Treasuries, and the dollar! Analyst: How Trump’s response to the Middle East crisis is key)
(Additional context: Rich Dad predicts “U.S. Treasuries and ETFs will collapse”! Promotes his book, The Trap of Entropy: Clinging to old money rules will turn you into a new poor person)

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• Debt surges by $7 billion per day; Bitcoin becomes an anti-debasement tool
• Economists warn: U.S. fiscal buffer is running out; recession could be even more painful
• Crypto market updates: BTC holds above $65K; Ether sounds the horn for the altcoin season

Amid the shadow of the U.S. budget deficit continuing to expand, more and more investors are looking for a safe haven outside the traditional financial system. On July 27, Taipei time, CoinDesk cited the latest U.S. Department of the Treasury data from “Debt to the Penny,” showing that as of last Friday, the total amount of U.S. federal debt has officially surpassed the $39.7 trillion mark, setting a historical record.

Debt surges by $7 billion per day; Bitcoin becomes an anti-debasement tool

The growth rate behind this astronomical figure is even more astonishing. Market observers say the U.S. government’s debt is increasing at a frantic pace of about $7 billion per day. If you convert this daily addition into cryptocurrency market capitalization, it could even place among the top 16 in the global crypto market cap—far exceeding the total market value of well-known tokens such as Monero (XMR).

This phenomenon of unlimited debt expansion is providing a strong fundamental backdrop for the “debasement trade” in the market. Investors are betting that the purchasing power of fiat currencies will continue to decline, so they actively buy assets with strictly capped supply, such as gold and Bitcoin, to hedge the currency-debasement risk brought by excessive fiscal issuance.

LondonCryptoClub founder, in plain terms, said: “This is a debt-driven world, and ultimately it will determine the policy direction of the Federal Reserve (Fed). Interest rates must be kept artificially low and liquidity provided to help the refinancing cycle. Last year, the ‘debasement trade’ was a popular narrative, then it cooled off for a while, but now it’s ready to accelerate again!”

Economists warn: U.S. fiscal buffer is running out; recession could be even more painful

Beyond concerns about currency debasement, the high level of debt also makes the U.S. economy look more fragile when facing potential crises. Apollo Chief Economist Torsten Slok issued a serious warning that the U.S. current debt-to-GDP ratio has surged past 120%. He noted that once a recession hits, the U.S. government will have almost no fiscal buffer left to add spending and rescue the market.

In addition, the Federal Reserve is also trapped in a policy dilemma. Slok analyzed that the Fed cannot take aggressive rate cuts like it did in past recessions, because it would not only worsen inflation but also push down bond yields. At a time when the government desperately needs to issue more new debt to cover deficits, bonds must offer sufficiently high returns to attract market buying. He emphasized: “The U.S. has never entered a recession with such limited fiscal buffers.” This means that if a crisis erupts, the period of market pain will likely be more prolonged, which in turn will spark strong public demand for assets outside traditional systems—such as Bitcoin.

Crypto market updates: BTC holds above $65K; Ether sounds the horn for the altcoin season

On current market performance, Bitcoin is trading steadily above $65k, benefiting from cooling inflation expectations driven by a drop in overnight international oil prices. Notably, Ether (ETH)’s price performance has recently outpaced Bitcoin. The ETH/BTC ratio chart shows that this ratio has successfully broken above both the 100-day and 200-day simple moving averages (SMAs). This is the first breakout since the crypto bear market began earlier this year, strongly suggesting that the upside momentum of Ether relative to Bitcoin is rapidly building—and market funds may be set for a new round of “altcoin season” trading.