Grayscale says US debt crisis sparks jump in Bitcoin, now up 20% in 30 days

Grayscale, one of the world’s largest cryptocurrency asset managers, has stated that escalating US government debt and new Treasury buyback operations are reviving the so-called “debasement trade” and driving renewed interest in bitcoin and select digital assets.

US debt surpasses $40 trillion, Treasury actions in focus

In a recent market note, Zach Pandl, Grayscale’s head of research, highlighted that the United States’ public debt has surged beyond $40 trillion, reaching historic levels. He explained that the Treasury is currently buying back bonds to help manage rising borrowing costs, but warned that the core deficit challenge remains unresolved.

The note described that “unchecked government debt growth undermines the credibility of fiat currencies and drives investors to seek out alternative stores of value like physical gold and certain cryptocurrencies,” citing bitcoin as the primary beneficiary.

As the government’s debt and its accompanying interest payments increase, there are limited options: raising taxes, cutting public spending, or issuing further debt. Analysts at Grayscale believe that expanding the dollar supply is the more politically palatable path, making scarce assets such as bitcoin more attractive in comparison to fiat money.