US government debt reached $40.05 trillion for the first time, according to the Treasury, prompting Bitcoin traders to ask whether crypto offers a better refuge from mounting fiscal risks. The total equates to about $119,700 per American, while annual interest costs approach $1.2 trillion. The government ran a $432.3 billion deficit in July, its widest monthly gap since March 2021, and the fiscal-year shortfall is nearing $1.8 trillion. Debt has risen by $17 trillion since 2020 and now roughly matches the size of the US economy. The resulting concern is a debt doom loop: heavier borrowing pushes bond yields higher, higher yields increase interest costs, and larger interest bills widen the deficit and require further borrowing. Treasury yields have risen since late June, with the 10-year note at 4.72% on August 17, based on St. Louis Fed FRED data. The Treasury said Wednesday it would double buybacks of long-dated bonds, after expanded buybacks helped pull the 30-year yield off its highs. Bitcoin briefly reclaimed $70,000 for the first time in almost 80 days, and traders have linked its appeal to the debasement trade, the view that debt-heavy governments may erode currency value and boost demand for hard assets. Strategy holds 840,447 BTC, while Japan’s Metaplanet owns more than 43,000 BTC and targets 100,000 by year-end. The trade remains uncertain: spot Bitcoin ETFs lost $4.9 billion in the second quarter, while hawkish Federal Reserve minutes showed three officials favored a rate hike and Chair Kevin Warsh floated fewer policy meetings. Upcoming bond auctions may indicate whether investors view the $40 trillion debt level as a warning or simply another milestone.