Bitcoin News Today: U.S. Debt Crisis Sparks Bitcoin and Gold Bets Amid Fears of Economic Reckoning

The U.S. national debt has surged to a record $37 trillion, climbing by an average of $6 billion daily in 2025, driven by escalating fiscal pressures from post-pandemic spending, rising interest rates, and political gridlock over budget negotiations. The debt-to-GDP ratio now exceeds 123%, a level not seen since the 1940s, with projections indicating continued growth absent structural reforms. This trajectory has reignited debates about unconventional strategies to manage the crisis, including proposals to leverage Bitcoin or revalue gold reserves to generate liquidity.

The debt accumulation reflects a century-long trend of exponential growth, with the national debt rising from $403 billion in 1923 to $35.05 trillion by August 2024. Recent legislative developments, such as the "Big Beautiful Bill," threaten to exacerbate the problem. The $1,100-page GOP-backed bill, which combines tax cuts, spending reductions, and a $5 trillion debt ceiling increase, is projected to add $2.4 trillion to the deficit over a decade, according to the Congressional Budget Office. Critics argue that the bill's revenue-neutral approach-cutting $3.67 trillion in revenue while trimming only $1.25 trillion in spending-will deepen the debt spiral, with deficits projected to exceed 7% of GDP annually under current policies.

Amid these challenges, President Donald Trump has proposed a controversial solution: using Bitcoin to address the debt crisis. Trump has floated the idea of converting the U.S. Treasury's 207,189 BTC holdings into a strategic reserve or directly offsetting debt through Bitcoin. However, analysts highlight significant hurdles. At the current price of $55,645 per BTC, the Treasury's holdings are valued at $10.46 billion-far below the $180 million-per-BTC valuation required to cover the $35 trillion debt. Critics, including economist Peter Schiff, argue that such a plan is economically infeasible and risks triggering hyperinflationary pressures.

An alternative proposal involves revaluing the U.S. gold reserves, which are officially priced at $42.22 per ounce but hold a market value of over $750 billion. The Federal Reserve's August 2025 research note on gold revaluation scenarios has revived discussions about this approach, though Treasury Secretary Scott Bessent has explicitly ruled out immediate action. Proponents suggest revaluing the $261.5 million-ounce gold reserve could generate liquidity to reduce debt or fund a sovereign wealth fund, but risks include inflationary spikes and potential erosion of Fed independence, as seen in the 1934 revaluation episode.

Bitcoin's role as a hedge against fiscal instability has also gained attention. With the U.S. dollar's purchasing power declining due to inflation and debt-driven devaluation risks, Bitcoin's fixed supply and decentralized nature position it as a potential store of value. Historical data shows Bitcoin outperformed traditional assets during past government shutdowns, such as the 2018–2019 crisis, where it rebounded to $8,300 after an initial 10% drop. However, institutional investors still favor gold, which has outperformed Bitcoin in 2025 with a 46% year-to-date gain compared to Bitcoin's 22.5%.

The debt crisis has broader macroeconomic implications. Rising U.S. debt costs are influencing global markets, with U.K. 30-year bond yields surpassing U.S. counterparts for the first time in two decades, signaling investor wariness about fiscal sustainability. If the U.S. debt ceiling is not raised, analysts warn of a "worst-case scenario" triggering broad market selloffs, though Bitcoin's resilience in past crises suggests it could benefit as a hedge against dollar instability.