Grayscale Investments has identified bitcoin, ethereum, and zcash as cryptocurrencies that could benefit from sustained U.S. government debt growth, according to an August 26 analysis by Grayscale Head of Research Zach Pandl.
Pandl argued that "unchecked government debt growth undermines the credibility of fiat currencies and drives investors to seek out alternative stores of value like physical gold and certain cryptocurrencies." He identified the three digital assets as primary beneficiaries of what he termed the "debasement trade."
Why These Three Assets
Bitcoin offers the most established scarcity argument among the three, with a programmed maximum supply of 21 million coins and no government issuer. Ethereum functions as a decentralized settlement network, while Zcash combines a Bitcoin-like design with optional privacy features.
U.S. Debt Reaches $40 Trillion
The Treasury Department's actions underscored debt pressures. On August 19, the Treasury announced an expansion of longer-term bond buybacks, doubling the maximum liquidity-support operations from $2 billion to $4 billion per transaction. The larger operations cover 10- to 20-year and 20- to 30-year securities and begin September 9.
The announcement coincided with total U.S. public debt surpassing $40 trillion for the first time, according to the Daily Treasury Statement for August 18.
Structural Deficits Drive Debt Growth
Grayscale views Treasury buybacks as responses to rising yields rather than solutions to structural deficits. The Congressional Budget Office projected a $1.9 trillion federal deficit in fiscal 2026, increasing to $3.1 trillion by 2036.
Of the total debt, approximately $32.266 trillion was held by the public, while $7.782 trillion represented intragovernmental holdings. The CBO projected that debt held by the public would rise from 101 percent of gross domestic product in 2026 to 120 percent by 2036.
Heavy private-sector borrowing for artificial intelligence infrastructure is also competing with government debt for available capital, according to Grayscale, potentially placing upward pressure on interest rates and federal financing costs.
