The U.S. national debt exceeded $40 trillion as of Aug. 18, according to the Treasury Department. This figure is more than double the debt level recorded in 2017.
Bitcoin (CRYPTO: BTC) fell 28% in the 12 months through Aug. 27, 2026. The relationship between the national debt and Bitcoin is not necessarily tightly coupled.
The Congressional Budget Office (CBO) projected in February 2026 that the annual deficit for this year would reach $1.9 trillion, or 5.8% of the country's GDP. The CBO also estimates that debt held by the public will reach 101% of GDP this year and 120% by 2036 if current trends continue.
The national debt represents the pool of liability borrowed but not yet repaid. Because this debt is held across various bonds and notes with different maturities and interest rates, the total amount owed is less meaningful than the debt-to-gross domestic product (GDP) ratio. This ratio compares the size of the debt pile to the economy's output, which serves as the means to repay it.
As the debt-to-GDP proportion increases, lenders are expected to demand higher yields to compensate for rising default risk. Four potential government strategies exist to address this dilemma: growing the economy faster than the debt, cutting government programs to reduce spending, increasing taxes to generate revenue for debt service, or inflating the currency to reduce the real value of the debt.
Inflation has specific implications for Bitcoin due to its fixed supply cap of 21 million coins. This scarcity makes it a candidate for an investment resistant to inflation, as it is not possible to print more Bitcoins even if the money supply increases significantly.
Fidelity Digital Assets published research in March 2026 suggesting that global money supply growth accounted for up to 87% of Bitcoin's price swings over the previous decade and a half. However, a follow-up report from Fidelity on Aug. 13, 2026, stated that the rolling 24-month correlation between Bitcoin and the global money supply had turned negative.
The odds favor Bitcoin becoming a decent inflation hedge again because its scarcity is programmed to increase over time. If more dollars circulate in the future, they will chase a smaller trickle of new Bitcoin, potentially making it more expensive.
Alex Carchidi has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin.