- The US plans to auction $31T in debt in 2025, equal to 109% of projected GDP.
- Foreign investors hold over $8.8T in US Treasuries, with Japan owning the largest share.
- Bitcoin has dropped 9.41% YTD as rising bond yields weigh on risk asset demand.
The United States Treasury Department will issue $31 trillion of debt when it conducts its 2025 auctions, making it the most extensive debt program in history. Significant debt issuance occurs when international financial pressures hurt global markets, mainly affecting digital assets, including Bitcoin. Binance Research data shows that the projected output exceeds previous annual rates and amounts to 109% of U.S. GDP and 144% of M2 money supply numbers.
The Treasury Department plans to surpass the $30 trillion level by 2024 and pass the $20 trillion threshold by 2023. These analysts predict massive government debt issuance might affect the market structure because demand may not catch up. Due to foreign investor ownership of around one-third of U.S. Treasury debt, their purchasing decisions will affect Treasury financing costs. Statistics from February show that foreign ownership of U.S. Treasury debt reached $8.817 trillion after an increase of 3.4%, while Japan, China, and the United Kingdom held the top positions.
Potential Impacts on Bitcoin and Risk Assets
Select factors from macroeconomic conditions have caused hardships for Bitcoin’s performance in 2025. The cryptocurrency value has decreased by 9.41% throughout the year and has lost over $170 billion from its market value. Analysts study how investor sentiment toward Bitcoin will be affected by the upcoming largest debt issuance of the U.S.The analysts at Binance Research describe the situation through two distinct perspectives.
The combination of bond yield growth, oversupply, and foreign demand reduction creates attractive financial instruments that could divert investment from cryptocurrency markets. The changing market trends will likely decrease Bitcoin’s popularity, specifically among institutional investors, who need safer investment vehicles. Bitcoin would benefit when the U.S. government implements debt monetisation by expanding the money supply for debt financing. Under these conditions, investors would view the asset as protection against the devaluation of money and rising inflation.
Macroeconomic Conditions and Fed Policy Outlook
Bitcoin and similar risk assets remain influenced by additional economic changes in the current market environment. Inflationary pressures persist at 2.5%, causing concern among Federal Reserve officials because their target is 2%. The Federal Reserve’s benchmark interest rate stands at 4.25% to 4.5% after multiple interest rate cuts during 2024 came to a halt. The market data from CME Group projects that an additional 1% rate cut will occur before 2025 ends.
Federal Reserve Chair Jerome Powell’s judgment demonstrates reserved behaviour. The recent inflation rise, new trade restrictions, and international political tension have led Powell to express his inflationary expectations. Donald Trump and other political leaders recommend more aggressive interest rate reductions because they want a competitive advantage against the lower European standard. According to Powell, the economy needs balanced measures to achieve stability in its operation.
