Bitcoin News Today: "Rising Debt and Bitcoin Reserves Signal a Shifting Global Financial Order"

The United States faces growing concerns over its escalating public debt, which has reached nearly $37 trillion and now accounts for nearly 100% of its national income. As the country’s debt-to-GDP ratio approaches post–World War II levels, rising interest rates and a diminishing appetite for U.S. debt among foreign investors have amplified concerns about a potential financial crisis. Higher borrowing costs have already become a burden, with interest payments exceeding defense expenditures in fiscal year 2024. Credit-rating agencies have downgraded U.S. debt, reflecting growing skepticism about the sustainability of current fiscal policies [1].

The rising interest rates are a critical factor in exacerbating the debt challenge. A one-percentage-point increase in the average borrowing rate would add $370 billion annually to the government’s interest burden. Historically, ultralow rates allowed for easy borrowing, but with the era of cheap money fading, the U.S. debt model appears increasingly vulnerable. Global markets are no longer as accommodating, and many foreign central banks are reportedly reconsidering their U.S. dollar exposure, citing concerns over political instability and fiscal mismanagement. This shift could reduce demand for U.S. Treasuries, further pushing up rates and increasing the cost of servicing the debt [1].

The Trump administration has sought to address the debt dilemma with ambitious growth projections, suggesting that rapid GDP expansion and falling interest rates could ease the fiscal burden. Independent forecasts, however, remain cautious, estimating an average annual interest rate of 3.6% through 2055. While the administration emphasizes the potential of artificial intelligence to drive productivity and growth, many experts remain skeptical about the near-term feasibility of such transformative outcomes due to regulatory, technical, and social bottlenecks. Moreover, political gridlock and the lack of a clear fiscal strategy complicate efforts to stabilize the debt trajectory [1].

Meanwhile, the U.S. dollar’s status as the global reserve currency is also under pressure. For decades, the dollar’s dominance has offered the U.S. lower borrowing costs, but rising debt levels and geopolitical uncertainties are causing countries to explore alternatives, including the Chinese yuan, the euro, and even cryptocurrencies. These trends could further erode demand for U.S. debt, creating a self-reinforcing cycle of rising interest rates and financial instability. Analysts warn that the U.S. may be approaching a crisis scenario, where a sudden loss of confidence in Treasuries could trigger a sharp spike in rates and broader economic turmoil [1].

In a related development, countries such as Brazil and the Philippines are exploring the use of Bitcoin as a strategic reserve asset. Brazil’s Congress is considering legislation that would allow the country to allocate up to 5% of its $344 billion in international reserves into Bitcoin. The proposal, inspired by U.S. and global trends, aims to diversify reserve holdings and position Brazil as a leader in digital asset innovation. While officials from the Ministry of Finance and the Central Bank raised technical concerns about Bitcoin’s volatility and suitability as a reserve asset, some lawmakers and industry representatives argue that the move could strengthen economic sovereignty and long-term financial planning [2]. The Philippines has also introduced the “Strategic Bitcoin Reserve Act,” which would require the central bank to purchase and hold 10,000 Bitcoin over five years. This initiative seeks to secure Bitcoin as a long-term asset, akin to digital gold, to safeguard against economic and geopolitical risks [3].

Source:

[1] America's Coming Crash: Will Washington's Debt Addiction ... (https://www.foreignaffairs.com/united-states/americas-coming-crash-rogoff)

[2] Brazil's Congress Explores A Bitcoin Strategic Reserve (https://www.forbes.com/sites/astanley/2025/08/24/brazils-congress-explores-a-bitcoin-strategic-reserve/)

[3] Philippine bill charts path to strategic reserve ... (https://cointelegraph.com/news/philippine-bill-strategic-bitcoin-reserve-10000-btc)