Analysis: US federal debt hits a new high of $39.7 trillion as the "devaluation trade" narrative boosts bitcoin's safe haven demand

Foresight News reported, citing CoinDesk, that according to data from the U.S. Department of the Treasury, federal debt reached a record high of 39.7 trillion dollars on Friday, growing at a rate of about 7 billion dollars per day. The founder of LondonCryptoClub told CoinDesk that this rapid increase supports the so-called "devaluation trade" narrative, where investors bet on the devaluation of fiat currencies and instead buy limited-supply assets such as Bitcoin and gold. This narrative had once faded but is expected to heat up again soon.

Apollo Chief Economist Torsten Slok previously warned in a blog post that the ratio of U.S. debt to GDP has exceeded 120%, leaving little fiscal buffer. If a recession hits, the Federal Reserve may find it difficult to cut interest rates sharply as in the past, since this would fuel inflation and lower bond yields. Currently, Bitcoin is trading at about 65,221.50 dollars. Ethereum is outperforming Bitcoin, as the ETH/BTC ratio has broken above both the 100-day and 200-day moving averages, marking the first time since the start of this year's bear market.