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- U.S. debt reaches a record $37.3 trillion, straining the dollar and Treasuries.
- Gold leads with 35% gains, but Bitcoin rises 19% YTD as a hedge.
- Ray Dalio warns of a looming debt crisis, boosting BTC’s safe-haven case.
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The United States is facing one of the most severe debt challenges in its history. With total debt standing at $37.3 trillion and annual interest payments exceeding $1 trillion, pressure is mounting on the economy. Hedge fund billionaire Ray Dalio has even warned that America could face a debt-induced “heart attack” within the next three years. Against this backdrop, questions are rising about the dollar’s stability — and whether Bitcoin (BTC) is quietly positioning itself as a hedge.
Mounting Debt Weakens Dollar and Bonds
The U.S. budget deficit climbed nearly 20% in July to $291 billion, despite additional tariff revenues. This signals that government income is failing to keep pace with spending. Investors are responding — the U.S. Dollar Index (DXY) has slipped by 11% over the past seven months, dropping to 98.386.
Meanwhile, U.S. Treasuries, traditionally seen as the world’s safest assets, are under strain. The 30-year yield surged nearly 5%, its highest level since before the 2008 financial crisis. The 10-year yield also rose to 4.22%, up from 3.84% a year ago. Together, these moves suggest confidence in both the dollar and bonds is eroding.
Bitcoin and Gold Shine Amid Macro Uncertainty
Amid this turbulence, alternative assets are rallying. Bitcoin has gained 18.76% in 2025, reinforcing its “digital gold” narrative. Yet, Gold (XAU) has outperformed with a 35.12% surge, marking its best yearly gain in nearly a decade.
Gold is telling the future:
— The Kobeissi Letter (@KobeissiLetter) September 3, 2025
The S&P 500 is in one of its strongest bull runs in decades, up +1,650 POINTS in under 5 months.
Meanwhile, Gold's YTD return just hit +37%, nearly 4 TIMES more than the S&P 500 YTD.
Why is gold crushing stocks in a bull market?
(a thread) pic.twitter.com/K2gW3AEnjT
What’s notable this cycle is that despite the Federal Reserve’s hawkish stance on rate cuts, capital continues flowing into Bitcoin. This divergence signals that investors are increasingly viewing BTC as a legitimate hedge against inflation, debt, and currency devaluation.
Fed’s Dilemma Strengthens Bitcoin’s Hedge Role
The Federal Reserve now faces a policy trap: raise rates and risk worsening the debt burden, or ease monetary policy and risk further dollar weakness and inflation. Either way, the system looks strained.
Also Read: Bitcoin on Edge: Will Friday’s Jobs Report Trigger a $112K Breakout?
For investors, this uncertainty is reinforcing Bitcoin’s case as a hedge. While gold remains the stronger performer for now, Bitcoin’s resilience in the face of macro pressures could mark a turning point in its adoption as a mainstream safe-haven asset.
With the U.S. debt crisis intensifying, the dollar and bonds are under pressure, leaving investors searching for alternatives. Bitcoin’s 19% YTD surge suggests it is slowly stepping into that role — not to replace gold, but to complement it. As America’s fiscal challenges deepen, Bitcoin may stand as one of the clearest beneficiaries of this era of uncertainty.
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Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
