Two months after Elon Musk criticized the Trump administration’s handling of national debt, reports show that the US added another $1 trillion in federal debt in just 48 days.
Deficit spending has become the biggest macro driver with the most mainstream attention. Bitcoin, Ethereum, and Decentralized Finance (defi) are no longer mere speculative theatre. Rather, they are structural hedges against a broken fiscal system.
Is US debt spiral about spending or interest rates?
Surges convert to approximately $21 billion per day. Something previously warned by analysts and investors like Elon Musk, highlighting that the Fiat system is trapped in an unsustainable path, and that digital assets could be hedges.
In hindsight, Elon Musk in particular called for one big beautiful bill recently signed to act as important in further amplifying the already surprising deficit.
However, since August 11, US debt has inflated $220 billion, pushing the national total within a notable $38 trillion distance.
Washington recorded a $291 billion deficit in July alone. The deficit was $1.63 trillion in fiscal year 2025, up 7.4% from the previous year, and it was on track to over $2 trillion.
Similarly, government spending exploded to 44% of GDP. This is at a level that can only be seen in World War II and the 2008 financial crisis.
The Federal Reserve still advocates soft landing, but the underlying numbers speak more harshly. Annual revenue was only 2.5%, with spending spiked by nearly 10% last month.
“…it’s a matter of spending, not an interest rate…it’s a expenditure crisis,” analysts in Shinma’s letter state clearly.
The statement suggests that even if the Fed cuts interest rates significantly, the annual deficit will remain in trillions.
Impact on crypto and financial markets
The bond market is already flashing warning signs. Investors are demanding higher yields from the US Treasury, with recent auctions exceeding 5%, a rarity in modern history.
As debt refinancing accelerates at a higher rate, the financial holes deepen. This shows a rather technical outlook for stocks, commodities, especially crypto.
In the short term, higher yields can drain liquidity from risky assets. However, in the long term, sustained deficit spending undermines trust in Fiat. This trend has historically benefited Bitcoin and Hardcap digital assets.
Crypto traders often frame Bitcoin as digital gold, but cases are strengthened when the Fiat administration shows financial unsustainability.
“Our current fiscal pathways have 100% certainty for US bankruptcy over the long term,” they added.
For many in crypto, the US debt trajectory examines the paper that decentralized assets provide protection against mismanagement of sovereignty.
With a $38 trillion debt looming and a deficit locked up above $1.5 trillion per year, the temptation for future policymakers to inflate their obligations will increase. That risk is bullish for the story of Bitcoin’s rarity.
Altcoins can indirectly benefit as institutional allocators explore alternatives to the Ministry of Finance that spawned eggs.
Stubcoins and tokenized Treasury have already absorbed capital, but liquidity ripples could extend to the broader crypto market.
What happens next depends on whether Congress takes over spending (not likely in an election year) and whether the Fed’s balance rate will positively assess its policy on debt sustainability. Nevertheless, both passes carry risks.
US debt will skyrocket $1 trillion in 48 days. The meaning of that was first to appear in cryptography was first introduced.
