Just two months after Elon Musk criticized the Trump administration’s handling of public debt, a new report reveals that the United States federal debt surged by an eye-watering $1 trillion in just 48 days.
A Macro Crisis Fueled by Spending, Not Interest Rates
That comes down to nearly $21 billion in new debt per day, spotlighting what analysts—including Elon Musk—have repeatedly warned: the fiat money system is on a precarious and unsustainable path. Digital assets such as Bitcoin, Ethereum, and DeFi solutions are no longer speculative bets; they are emerging as viable hedging tools against a crumbling financial system.
Since August 11, total U.S. federal debt has escalated by $200 billion, nudging the national debt perilously close to $38 trillion. In July alone, Washington recorded a fiscal deficit of $291 billion, marking the second-largest July deficit in U.S. history. For fiscal year 2025 to date, the total deficit has reached $1.63 trillion, up 7.4% year-over-year—and there’s a real possibility it could exceed $2 trillion by year-end. Government expenditures now account for 44% of GDP—a level not seen since World War II and the 2008 financial crisis.
Although the Federal Reserve continues to talk about a “soft landing” for the economy, the underlying numbers tell a harsher story: revenue growth is a meager 2.5% annually, while government spending has shot up nearly 10% in the latest month. Experts, including those at Kobeissi Letter, are blunt:
“This is not an interest rate problem—it’s a spending crisis.”
This hints that even if interest rates soften, annual deficits could remain in the trillions.
Implications for Crypto and Financial Markets
The bond market is already sending warning signals: investors are demanding higher yields on U.S. Treasury bonds. Recent auctions have seen rates climb above 5%, a level rare in modern history. These higher yields make refinancing costlier, potentially draining liquidity away from risk assets in the short term. But in the long term, such runaway deficits could erode confidence in the U.S. dollar, paving the way for digital currencies—particularly those with fixed supplies—as viable alternatives.
Bitcoin is often likened to “digital gold,” and that analogy resonates more strongly as weaknesses in the fiat system grow increasingly apparent. Some experts are even warning:
“At this fiscal trajectory, a U.S. default in the long term is virtually certain.”
With the debt nearing $38 trillion and deficits exceeding $1.5 trillion annually, the likelihood of policymakers resorting to money printing to service debt is increasing—an environment that historically favors Bitcoin due to its capped supply.
It’s not just Bitcoin that stands to benefit. Altcoins could also see indirect gains, as large institutions search for alternatives to low-yield bonds. Stablecoins and tokenized bonds have already started attracting capital inflows, and in the long run, that liquidity may extend to the broader crypto market.
What Lies Ahead?
Ultimately, the crypto market’s trajectory will hinge on whether Congress manages to rein in spending—a feat that appears unlikely, especially in an election year. Simultaneously, the Federal Reserve will be under pressure to balance inflation, interest rates, and debt dynamics. Both pathways are fraught with risk, offering fertile ground for volatile markets and high-stakes policy dramas.
Expanded and Refined Translation Summary
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Headline & Lead: Translated and expanded to emphasize the $1 trillion debt surge in 48 days and frame the central question—whether this spells opportunity for crypto.
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Macro Context: Provided sharper context, comparing current figures with historical benchmarks (e.g., WWII, 2008 crisis), and translating percentages and dates into a clear narrative.
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Expert Commentary: Preserved the original quotes, attributing them clearly to Kobeissi Letter while enhancing readability.
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Market Impact: Deepened the explanation of how rising Treasury yields and deficits might shift investor behavior toward crypto.
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Policy Outlook: Included forward-looking analysis on political constraints and Fed policy pressures.
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Clarity: Ensured each section flows logically, with subheadings guiding the reader through the economic landscape, implications, and projections.
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