Grayscale Report: U.S. Public Debt Nears $30 Trillion, Fueling Demand for Bitcoin and Ethereum as Fiat Hedges

Digital asset manager Grayscale has released a report indicating that the stability of the U.S. dollar is under increasing pressure, highlighting Bitcoin (BTC) and Ethereum (ETH) as potential hedges against fiat devaluation. As summarized by Cointelegraph in a recent tweet, the "INSIGHT: Grayscale report says the US dollar’s stability is under pressure, highlighting BTC and ETH as potential hedges against fiat devaluation." This analysis comes amid growing concerns about global economic uncertainty and the long-term credibility of traditional currencies.

Grayscale's analysis points to the U.S. government's commitment to low inflation becoming less credible due to high public debt, rising bond yields, and persistent deficit spending. The national debt, now approximately $30 trillion or 100% of GDP, is on an unsustainable trajectory. This fiscal environment raises questions about the long-term viability of fiat currencies as reliable stores of value for investors.

In this context, Bitcoin and Ethereum are presented as alternative monetary assets with distinct features. Their programmatic and transparent supply, coupled with autonomy from any single institution or political system, makes them attractive. Similar to physical gold, their utility partly stems from their unchanging nature and detachment from governmental influence, offering a potential refuge from conventional money.

The report underscores that if holders of U.S. Dollar-denominated assets begin to doubt its reliability, they may actively seek out alternatives. This macro demand for crypto assets is expected to rise as long as public debt continues to grow unchecked and governments struggle to credibly promise low inflation. However, Grayscale notes that demand for crypto hedges could wane if policymakers successfully restore confidence in fiat currencies through fiscal discipline.

Grayscale, a leading crypto asset manager, emphasizes that while many digital assets exist, a select few, including Bitcoin and Ethereum, are considered viable stores of value due to their widespread adoption, decentralization, and limited supply growth. The firm's research suggests that the ongoing macroeconomic imbalances make holding alternative monetary assets crucial for portfolios seeking a ballast against fiat currency debasement.