US debt nears $40 trillion, investors turn to Bitcoin and gold to hedge against dollar depreciation

Comparatively, as US government debt continues to rise, investors are refocusing on scarce assets such as Bitcoin and gold as a hedge against the declining purchasing power of the US dollar.

As of last Friday, the US federal debt had risen to a record $39.7 trillion, according to the US Treasury's one-cent debt data. Some market sources pointed out that US government debt is currently increasing by about 7 billion US dollars every day. If calculated by market value, this increase already exceeds that of most crypto assets.

The founder of LondonCryptoClub said that the growth rate of US debt is driving so-called currency depreciation transactions, where investors buy assets with limited supply, such as gold and Bitcoin, to cope with the risk of long-term devaluation of fiat currencies.

The agency believes that in a fiscal dominance (fiscal dominance) environment, the Fed's policy may be affected by government financing needs, and interest rates need to be kept low while continuing to provide liquidity to help refinance debt.

Apollo's chief economist Torsten Slok previously warned that US debt already accounts for more than 120% of GDP, and there is limited room for fiscal stimulus during future economic recessions. At the same time, it is difficult for the Federal Reserve to cut interest rates as drastically as in the past, because interest rate cuts may increase inflation, reduce treasury bond yields, and affect government financing.

Currently, the price of Bitcoin remains above $65,000. Driven by the easing of the situation in the US and Iran and falling oil prices, market risk appetite has rebounded. Meanwhile, Ethereum has recently outperformed Bitcoin, and the ETH/BTC exchange rate has broken through the 100-day and 200-day EMAs, and the market believes that the altcoin market may be heating up.

However, analysts pointed out that since its inception in 2010, Bitcoin's price trend is more similar to technology stocks than traditional safe-haven assets, and its safe-haven properties are still disputed.

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