US National Debt 38.5 Trillion Impact: Why Bitcoin and Gold are Surging

While the crypto market rallies in the new year, it's not the only thing hitting new heights. The US national debt has officially surged to $38.5 trillion, pushing the debt-to-GDP ratio beyond 120%. It's a staggering figure that means for every $100 the country earns, it owes $120.

US National Debt 38.5 Trillion Impact on Fiscal Policy

According to debt dashboards as of January 6, 2026, the US now pays over $1 trillion annually in interest alone—an amount that exceeds the national defense budget. This fiscal strain is leading analysts to warn of 'fiscal dominance,' where the Federal Reserve might be forced to keep interest rates low simply to manage the government's borrowing costs, rather than to fight inflation.

President Donald Trump has repeatedly pressured the Fed to slash rates to 1% or lower. While lower rates help service the massive debt, they also weaken the dollar, driving investors toward alternative stores of value like Bitcoin and Gold.

The Bull Case for BTC and Hard Assets

Analysts at Bitfinex noted that a structurally weaker dollar rewards assets with real or defensive characteristics. Gold already jumped 60% last year due to these fears. Meanwhile, Bitcoin is catching up, recently reaching a 6-week high near $95,000 as it prices in the long-term risk of inflation.