$40T US debt neither bullish nor bearish for Bitcoin

The US gross federal debt crossed $40 trillion for the first time around August 18-19, landing at roughly $40.05 trillion according to Treasury data. That's double where it stood in 2017.

The core bull case is straightforward. When a government owes $40 trillion and spends nearly $1.2 trillion per year just on interest payments, the temptation to let inflation quietly erode that debt becomes enormous. That's bad for anyone holding dollars. It's theoretically great for anyone holding something with a hard cap on supply.

Bitcoin, with its fixed ceiling of 21 million coins, fits that description. So does gold, which has also been climbing alongside these debt milestones. The idea of rotating into scarce assets when governments are drowning in obligations has a name in institutional circles: the debasement trade.

BlackRock's head of digital assets, Robbie Mitchnick, has linked rising sovereign debt concerns to growing institutional appetite for Bitcoin. Ray Dalio, the founder of Bridgewater Associates, has made similar noises about the appeal of hard assets in a high-debt world.

MicroStrategy, the company that has essentially turned itself into a publicly traded Bitcoin treasury, continues accumulating coins.