BIT Research: Gold and Bitcoin both break through, what is the $40 trillion US debt changing?

Gold and Bitcoin have both recently seen breakthroughs. Bitcoin has broken through the downward trend line formed during this bear market and has re-established itself above the 21-week moving average, which previously served as an important dividing line; gold has also strengthened after reaching a historic high at the beginning of the year and undergoing a noticeable correction. Meanwhile, U.S. government debt has surpassed $40 trillion, and the yield on 10-year U.S. Treasuries briefly touched around 4.70%, putting continued pressure on global long-term financing costs.

As the scale of U.S. debt continues to expand, future policies may have to tolerate a relatively high level of inflation for a period to alleviate actual debt pressure. Against this backdrop, hard assets like gold and Bitcoin have regained attention, and a series of measures recently taken by the U.S. Treasury regarding the long-end Treasury market further signal that the macro environment is changing.

$40 Trillion U.S. Debt Combined with 4.70% Treasury Yield: Pressure on the Long-End Market Increases

Over the past year, U.S. government debt has grown by about 10%, rising from $36 trillion to $40 trillion. In early July 2025, the U.S. statutory debt ceiling was raised by another $5 trillion, releasing greater space for subsequent debt expansion. At the same time, large U.S. tech companies are issuing bonds at record levels to finance AI infrastructure construction, with a significant increase in corporate bond supply further competing for investor funds alongside U.S. Treasuries.

Overseas demand is also changing. Japan remains the largest overseas holder of U.S. Treasuries, with holdings of about $1.1 trillion, but as the yield on Japanese 10-year government bonds approaches 3% and the 30-year yield rises above 4%, the attractiveness of domestic bonds has significantly increased. Chinese investors have also shown a similar trend, with their holdings of U.S. Treasuries decreasing by about $700 billion from historical highs.

In response to the pressure on the long-end market, the U.S. Treasury announced on August 19 that it would at least double the liquidity support repurchase scale for nominal coupon Treasuries with maturities of 10 to 30 years, raising the maximum single transaction size from $2 billion to at least $4 billion, to be implemented from September 9 to November 4. Although this is not entirely the same as the Federal Reserve's "Operation Twist" in 2011, the market effects both aim to alleviate pressure on the long-end market and limit further increases in long-term financing costs.

Gold and Bitcoin Breakthroughs: Hard Assets Regain Attention

The combination of gold and Bitcoin remains an effective way to hedge against the continuous rise in debt. As U.S. debt continues to expand, the logic of funds rotating into hard assets like gold and Bitcoin is further strengthened. Meanwhile, the market had previously priced in the possibility of two more interest rate hikes within the year, but the current trend of cooling inflation has re-emerged, bringing new changes to the market environment.

Technical signals are also worth noting. After reaching a historic high at the end of January 2026, gold underwent a significant correction, with its weekly relative strength index dropping to the lowest level since the start of this gold bull market in September 2023, creating conditions for a reversal. Bitcoin has broken through the downward trend line of this bear market and has re-established itself above the 21-week moving average. Previous cycle indicators also show that Bitcoin is very close to the bottom, and August may become an important time window for confirming the bottom of this cycle.

Overall, the U.S. government debt surpassing $40 trillion, the pressure on long-end Treasury yields, and the U.S. Treasury expanding the repurchase of long-term Treasuries collectively form the important macro backdrop behind the recent breakthroughs of gold and Bitcoin.

Policy interventions can temporarily alleviate pressure on long-end yields, but they are unlikely to fundamentally reverse the pressures facing debt supply and the global fixed-income market. This suggests that the trend of funds flowing back into gold may continue, and a similar logic may gradually manifest in Bitcoin as well. What is worth paying attention to next is whether the Bitcoin cycle bottom in August can be ultimately confirmed, and whether the policy response to long-end Treasury yields can continue to be effective.

Some of the views above are sourced from BIT on Target, Contact Us for the complete report of BIT on Target.

Disclaimer: The market has risks, and investment should be cautious. This article does not constitute investment advice. Trading in digital assets may carry significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. BIT is not responsible for any investment decisions made based on the information provided in this content.