Dear investors, have you been shocked by the recent news about the skyrocketing national debt of the United States? $37 trillion! This is a staggering figure, and even more unsettling is that 25% of our tax revenue is being used to pay the interest on this massive debt. This is not just a cold statistic; it resembles an approaching tsunami, reigniting questions about inflation, long-term fiscal stability, and the future of the dollar.
In this context, where should our investment portfolio go? Are Bitcoin and stablecoins, these emerging digital assets, a safe harbor in a crisis, or will they sink along with all risky assets? Today, I will take you deep into this unprecedented debt crisis and share my investment thoughts and asset allocation strategies.
I. $37 Trillion Debt: An Economic Hurricane Not to Be Ignored
First, let’s confront this alarming reality: the U.S. national debt has surpassed $37 trillion. According to the latest data from the U.S. Treasury, this figure continues to rise as of June 2025. What’s more concerning is that 25% of federal tax revenue is being used to pay the interest on this enormous debt. What does this mean? Simply put, for every four dollars of tax collected, one dollar goes directly into the pockets of creditors, rather than being used for infrastructure, education, healthcare, and other public services.
These numbers sound alarm bells. History tells us that when government debt reaches such a massive scale and continues to rely on borrowing to sustain operations, it often triggers a series of chain reactions:
Risk of uncontrolled inflation: To repay debts, the government may be inclined to print money or use loose monetary policies to reduce the actual value of debt. This will lead to an increase in the money supply, which in turn will drive up prices, eroding our purchasing power and making our hard-earned money worthless. Inflation is like an 'invisible tax' that unknowingly empties our wallets.
Damage to the credibility of the dollar: The dollar's status as the global reserve currency is rooted in market confidence in its long-term stability and responsible fiscal policies of the U.S. When the debt burden becomes unsustainable, this confidence will waver, potentially leading to a devaluation of the dollar and weakening its dominance in global trade and finance. This poses a significant risk for us investors holding dollar assets.
“Crowding Out Effect” suppresses economic growth: The government’s massive issuance of treasury bonds to repay debts will absorb a large amount of capital in the market, resulting in reduced funds available for the private sector, driving up borrowing costs. This will suppress business investments and innovation, hindering the long-term healthy development of the economy.
These concerns are not unfounded. Looking at history, from the fall of the Roman Empire to the hyperinflation in the Weimar Republic, all confirm the devastating impact of excessive debt on national economies. Although the U.S. has the world's strongest economy and the deepest financial markets, this does not mean it can indefinitely overdraw future credit.
II. The Duet of the Crypto Market: Safe Haven or Risk?
In the face of such macroeconomic headwinds, how will the cryptocurrency market react? This is not a simple binary choice; I believe it will present a duet: some investors may see Bitcoin and stablecoins as safe-haven assets, while others may view them as high-risk assets that will suffer blows alongside traditional risk assets.
2.1 Bitcoin: The Temptation and Tests of Digital Gold
Bitcoin is often referred to as 'digital gold,' and its core appeal lies in its decentralization, limited supply (hard cap of 21 million), and censorship resistance. In the face of inflationary pressures and credibility crises within the fiat currency system, these characteristics make Bitcoin an attractive means of value storage.
Inflation Hedge: In an environment of rising inflation expectations, people will seek assets that can preserve and increase value. Unlike fiat currencies that can be issued in unlimited quantities, Bitcoin's supply cap gives it scarcity, which is reminiscent of gold's performance during inflationary periods. When the dollar's purchasing power declines, holding Bitcoin may become an effective way to hedge against inflation.
Sovereign Risk Hedge: In the face of potential currency devaluation and financial system uncertainties caused by excessive government debt, Bitcoin, as a supranational asset, is not influenced by any single country's policies, giving it unique appeal in the eyes of certain investors, especially those who have lost confidence in the traditional financial system.
However, we must also recognize that Bitcoin is not a perfect safe haven without risks.
Volatility: The Bitcoin market is still relatively young, and its price volatility far exceeds that of traditional assets, making it unsuitable for all investors, especially ordinary investors with low risk tolerance. During global economic downturns or liquidity tightening, Bitcoin may also face significant pullback pressures, as seen in several historical 'crypto winters.'
Regulatory Uncertainty: Governments' regulatory attitudes toward cryptocurrencies are still evolving, and any severe regulatory measures could negatively impact market sentiment and prices.
Correlation: Although Bitcoin is regarded as digital gold, under certain macroeconomic pressures, it may still show a positive correlation with risk assets like tech stocks. This means that during a broad sell-off of risk assets, Bitcoin may also struggle to stand alone.
2.2 Stablecoins: Anchors in the Digital World
Stablecoins, especially those pegged 1:1 to the dollar (like USDT, USDC), play a unique role in the current macroeconomic context. They aim to provide price stability while also having the convenience and programmability of cryptocurrencies.
Fiat Currency Alternatives: In extreme cases where the dollar's credibility is damaged, if the dollar truly experiences a significant devaluation, the appeal of stablecoins pegged to the dollar would decrease. However, it is worth noting that the value of stablecoins ultimately depends on the fiat currency they are anchored to. If multiple fiat currencies face credibility issues in the future, stablecoins pegged to physical assets like gold or a basket of currencies may gain more attention, but currently, the mainstream remains dollar-pegged stablecoins.
Cross-Border Payments and Arbitrage: Stablecoins provide low-cost and efficient cross-border payment solutions, and their advantages will be even more pronounced amid growing global economic uncertainty and restricted capital flows. At the same time, stablecoins also play an important mediating role in arbitrage operations between different regions or exchanges.
Foundations of DeFi: Stablecoins are a core component of the decentralized finance (DeFi) ecosystem, providing stable valuation and settlement tools for activities like lending and trading. As risks in the traditional financial system become exposed, the appeal of DeFi may further rise, driving demand for stablecoins.
However, stablecoins also carry risks:
Trust and Reserve Transparency: The stability and trustworthiness of stablecoins depend on whether the reserves claimed by the issuer are real, transparent, and sufficient. There have been historical instances of stablecoins becoming unpegged, reminding us to remain vigilant about the issuer’s reserve situation.
Regulatory Scrutiny: The regulation of stablecoins is a focus of attention for governments worldwide, and they may face stricter regulatory requirements in the future, which could affect their issuance, circulation, and use.
Counterparty Risk: Even large-cap stablecoins like USDT and USDC carry credit risks of the issuing institutions and the banks they partner with.
In summary, the impact of the U.S. national debt crisis on the crypto market is complex. On one hand, it may prompt some investors to view Bitcoin as a safe-haven asset and stablecoins as tools for value transfer and storage within the crypto ecosystem. On the other hand, if the debt crisis triggers a global economic recession leading to widespread sell-offs of risk assets, the crypto market may not be spared, and it could suffer even greater shocks due to its inherent high volatility.
III. My Investment Portfolio Allocation Strategy: Balancing Stability and Flexibility
In the face of the current macroeconomic situation, my investment portfolio allocation adheres to the principles of stability and flexibility. I believe that in an era of increasing uncertainty, diversification, long-termism, and continuous learning and adjustment are the keys to success.
3.1 Core Holdings: Bitcoin and Ethereum
In my investment portfolio, Bitcoin (BTC) and Ethereum (ETH) constitute the core holdings, making up a substantial proportion.
Bitcoin: I see it as the representative of 'digital gold'. Although it experiences severe short-term volatility, its scarcity, decentralized nature, and the consensus foundation as the largest cryptocurrency globally make it an excellent choice for hedging against the risk of fiat currency devaluation and achieving asset preservation and appreciation. In the current context of high U.S. debt and rising inflation concerns, the long-term value logic of Bitcoin becomes even more solid. I will not frequently chase highs and sell lows, but will gradually accumulate positions through regular dollar-cost averaging (DCA) across different price ranges to average costs and avoid the interference of short-term market sentiment.
Ethereum: As the leader of smart contract platforms, Ethereum's ecosystem's prosperity, ongoing innovation capabilities, and future upgrades (such as EIP-4844 and upcoming sharding technology) bring significant scalability potential, giving it enormous growth space. Hot sectors like DeFi, NFT, and the Metaverse are all built on Ethereum, making it not just a means of value storage but also a 'digital oil' with strong application scenarios. I am optimistic about Ethereum's foundational status in the Web3.0 era.
3.2 Strategic Allocation of Stablecoins
In my investment portfolio, stablecoins are not merely 'transitional' assets but hold strategic significance, accounting for about 10%-20%.
Buffering During Market Volatility: During periods of severe market volatility, converting a portion of assets into stablecoins can effectively avoid short-term downward risks and preserve purchasing power. It's like dropping anchor before a storm, waiting for calm seas.
Seizing the Opportunity to Buy the Dip: When the market experiences panic selling and quality assets are undervalued, holding stablecoins allows me to quickly seize entry opportunities to buy quality assets at a lower cost.
DeFi Yield Opportunities: I will also use a portion of stablecoins to participate in low-risk lending or liquidity mining in DeFi to obtain relatively stable returns. Of course, the premise is to conduct thorough due diligence on DeFi protocols, choosing platforms that are audited, have high Total Value Locked (TVL), and lower risks. For example, providing liquidity on mainstream lending platforms like Aave and Compound, or stablecoin exchange platforms like Curve.
3.3 Small Allocation to High-Potential Altcoins and Emerging Sectors
Besides core assets and stablecoins, I will allocate **a small portion of funds (no more than 10% of total funds)** to high-potential altcoins and emerging sectors. This part of the investment falls into the high-risk, high-return category, aimed at seeking excess returns.
Focus on Fundamentals: I will not blindly chase hot trends, but will conduct in-depth research on a project's technological innovations, team background, community activity, application scenarios, and pain points it addresses. For example, I may focus on long-term development potential sectors such as Layer 2 solutions, modular blockchains, decentralized storage, and DePIN (Decentralized Physical Infrastructure Networks).
Strict Stop Loss: For this part of high-risk investment, I will set strict stop-loss lines. Once breached, I will decisively exit to prevent further losses. At the same time, I will also take profits in a timely manner when expected gains are reached to lock in profits.
3.4 Continuous Learning and Risk Management
In the cryptocurrency market, knowledge is power, and risk management is the lifeline.
Keep Learning: I will spend a considerable amount of time reading industry reports, tracking the latest technological developments, paying attention to macroeconomic news, and participating in community discussions to ensure that my knowledge system remains up to date. The market changes rapidly; failing to learn will lead to obsolescence.
Diversify Risks: In addition to diversifying asset classes, I will also spread funds across different exchanges and wallets, while strictly safeguarding private keys to prevent single-point risks.
Emotional Control: Market sentiment fluctuates wildly; fear and greed are major investment taboos. I will strive to remain calm and rational, not swayed by short-term price fluctuations, and adhere to my investment logic.
IV. Looking Ahead: Challenges and Opportunities Coexist
The issue of U.S. national debt undoubtedly brings significant uncertainty to the global economy, but for the crypto market, this is both a challenge and an unprecedented opportunity.
The challenge is that if the global economy falls into recession and balance sheets deteriorate, all risk assets, including cryptocurrencies, may suffer heavy blows. The opportunity lies in the inherent problems of the traditional financial system, such as inflation, debt expansion, and centralized risks, which will highlight the value of cryptocurrencies as alternative, censorship-resistant, and scarce assets. Bitcoin and high-quality decentralized blockchain projects will have the opportunity to play a more significant role in the evolution of the financial system.
As ordinary investors, we cannot control the macroeconomic trends, but we can protect and grow our wealth by enhancing our understanding, reasonably allocating assets, and adhering to long-termism. Do not hope for overnight wealth, but focus on long-term trends and value. In the world of digital currency, patience and discipline are more important than any skills.
This unprecedented debt tsunami may be our opportunity to re-examine the traditional financial system and embrace innovative digital assets. The safety of your wallet largely depends on your judgment of the future and your actions today.
Lastly, I want to ask everyone, in this macroeconomic context, how would you adjust your investment strategy? What new thoughts do you have about the future of cryptocurrencies? Feel free to share with me in the comments section, and let’s explore the future of investment together!
