As of October, the US national debt 2025 has surpassed $38 trillion, representing the fastest $1 trillion increase in sovereign borrowing recorded outside of the COVID-19 pandemic period. With investors grappling with what this means for the dollar’s long-term stability, attention is turning once again to Bitcoin and other alternative assets that promise protection against dollar debasement and inflation.
Could 2025 finally be the year Bitcoin fulfills its role as the ultimate hedge, or is its reputation as an inflation hedge still more about hope than demonstrated performance?
The US national debt crisis deepens
The big and fast accumulation is likely due to several factors, such as persistent budget deficits, rising interest-service costs, partly driven by Federal Reserve rate hikes, an aging population, and substantial money allocated to military and social programs.
Additionally, rising interest payments have ballooned above $880 billion annually and are projected to exceed $1.8 trillion by 2035, according to the Peter G. Peterson Foundation.
Economists warn that the US debt-to-GDP ratio (currently hovering near 124%) is on a dangerous trajectory. They note that while the country has had similar levels during wartime economies, today’s situation lacks the major economic boom that usually follows such massive spending.
Related: Bitcoin Price Eyes CPI Data: Will Inflation Trigger its Next Breakout or Breakdown?
US national debt by year
To illustrate how the debt has evolved, here’s a breakdown of the US national debt by year, including approximate totals and primary causes of increase:
| Year | Debt (approximate) | Primary reason(s) |
| 2021 | $28.42 trillion | COVID-19 relief spending |
| 2022 | $30.93 trillion | Inflation Reduction Act |
| 2023 | $33.17 trillion | Higher borrowing costs due to rising interest rates |
| 2024 | $35.46 trillion | Credit rating downgrade |
2025 | $38.00 trillion | Record spending pace, aging demographics, defense budgets, high borrowing costs |
$38T Debt Fuels Dollar Debasement Fears
When government debt rises faster than GDP (as is the case with the US national debt 2025), it often leads to monetary expansion, which means effectively printing more dollars to cover fiscal gaps. However, over time, this dilutes the currency’s purchasing power.
Though inflation in 2025 remains under control compared to the 2022 peaks, core inflation is above 3% (higher than the Federal Reserve’s target of 2%), and real wage growth has stagnated. Right now, the real worry is not a sudden inflation spike, but a slow, steady loss of the dollar’s value as more and more tax money is used just to pay interest on the national debt.
This has led investors to once again look for safe havens, turning attention to options like Bitcoin, gold, and government bonds that are designed to protect against rising prices.
Bitcoin’s Scarcity: The Case for a Debasement Hedge
Bitcoin’s appeal lies in its fixed supply of 21 million coins, making it immune to dilution via money printing.
Supporters believe Bitcoin’s limited quantity makes it a powerful tool for protecting wealth when governments print more money. This feature is seen as especially valuable during times when central banks are compelled to create large amounts of new currency.
Over the past decade, Bitcoin’s price trajectory has often responded positively to liquidity expansions. For instance:
- After the 2020 COVID-19 stimulus packages, (a form of quantitative easing), Bitcoin surged from $9,000 to over $60,000 by 2021.
- On the other hand, when interest rates were raised in 2022 and 2023, (quantitative tightening), Bitcoin’s value fell sharply, just like the stock market.
This pattern establishes Bitcoin as an asset whose value is influenced by monetary liquidity (even more so as the US national debt by year increases continuously). While it has not yet achieved the status of a traditional safe-haven asset like gold, its performance is becoming increasingly correlated with the direction of global central bank policies.
In general, Bitcoin tends to rally when inflation expectations rise but liquidity remains abundant. It struggles during periods of tight monetary policy, when risk assets sell off together. As such, BTC performs best as a debasement hedge when money is flowing, not when rates are restrictive.
Related: BlackRock CEO Larry Fink Calls Bitcoin a “Hedge Against Debasement” as IBIT Crosses 781,000 BTC
Institutional Adoption via ETFs Boosts Bitcoin’s Legitimacy
This year, apart from the rising US national debt 2025, increased activity from major financial firms has made Bitcoin a more established player in the global economic landscape, boosting its perceived legitimacy. Just this month, there were a few interesting developments regarding institutional adoption.
For example, investment giant T. Rowe Price, which manages a massive $1.77 trillion, recently filed for an actively managed crypto ETF. A bit earlier, VanEck and BlackRock both launched spot crypto ETF products that attracted billions in inflows within weeks.
Related: $1.77 Trillion Asset Manager T. Rowe Price Wants an Active Crypto ETF, Here’s What It Tracks
A few days ago, VanEck also submitted an application for a staked Ethereum ETF linked to Lido’s stETH, aiming to provide investors with a regulated vehicle for gaining exposure to liquid staking tokens.
The recent surge in ETF applications (over 155 crypto ETF filings awaiting SEC action) and their subsequent regulatory approval via products like Spot Bitcoin ETFs, is fundamentally reshaping Bitcoin’s identity. It’s moving from being a niche interest for individual investors to becoming a legitimate asset class for major financial institutions, much like what happened to gold after it got its own mainstream investment funds twenty years ago.
Related: XRP and Solana Front 155 ETF Filings as SEC Backlog Grows
Skeptics believe Bitcoin isn’t a true hedge yet
Despite progress, critics argue Bitcoin continues to behave like a high-beta tech asset, closely tracking Nasdaq movements rather than gold.
Financial commentator Peter Schiff and economist Nouriel Roubini maintain that Bitcoin’s volatility makes it an unreliable safe haven. In addition, recent liquidations of over $700 million in leveraged crypto positions show that speculative trading still dictates market activity.
At the same time, even though the US national debt 2025 increased, the US dollar index (DXY) stays strong, suggesting that international confidence in American debt and the liquidity of its Treasury market has not yet diminished, for now at least.
Related: Digital Gold or Real Gold? Peter Schiff’s Case Against Bitcoin Gains Momentum
Outlook: US Debt, Fed Policy Key for Bitcoin’s Hedge Role
Bitcoin’s path in the remaining months of 2025 depends heavily on three things: how much more debt the US takes on, what the Federal Reserve does with interest rates, and how investors feel about risk.
If the cost of the national debt forces the Fed to pump money into the economy again, Bitcoin’s price could surge. But if the Fed keeps rates high to fight inflation, it could cool off the market.
Despite this short-term uncertainty, the core argument for Bitcoin (that it protects wealth when governments print too much money) is becoming more persuasive. The deeper the US goes into debt, the more people and large funds alike look for assets that can withstand the potential fallout.
In the end, the $38 trillion US national debt 2025 is a red flag that goes beyond simple overspending – it points to a deeper problem with a financial system built on constant borrowing.
For those who can handle its risks and volatility, Bitcoin serves as a potential insurance policy against the declining value of the dollar.
Related: Gold Jumps First, Bitcoin Often Follows Next on the 80-Day Cue – Analyst
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