US Set to Auction Record $31T in Treasury Debt in 2025: Here’s How Bitcoin Could React

Bitcoin might find itself battling macroeconomic headwinds for a longer time, as the U.S. looks set to auction a record amount in Treasury debt this year. Currently battling the bears around the $80,000 territory, Bitcoin (BTC) has been a victim of macroeconomic uncertainties for most of this year. Due to these headwinds, the crypto firstborn has collapsed 9.41% year-to-date, losing over $170 billion in valuation. US Treasury Set to Auction Record Debt Figure in 2025 However, recent reports suggest these bearish macro factors are not cooling off soon. Specifically, the United States Treasury Department is preparing to auction over $31 trillion in debt. This is according to Binance Research, the research arm of the world's largest crypto exchange.

Data confirms that this would mark an unprecedented annual figure. For context, in 2024, Treasury debt auctions were worth a little under $30 trillion, and in 2023, the figure was slightly above $20 trillion. Binance confirmed that the figure represents 109% of the projected U.S. GDP and 144% of M2 money supply, near-record ratios that signal intense pressure on financial markets. This reality might have implications for investors eyeing Bitcoin as a hedge or risk asset.

According to Binance Research, the $31 trillion Treasury supply could massively influence markets. The sheer scale of issuance, even with stable demand, could be challenging.  Foreign investors, who hold roughly one-third of U.S. debt, are particularly important. Interestingly, a recent Reuters report confirmed that Treasury holdings of foreign entities spiked 3.4% in February to $8.817 trillion. Major holders include Japan ($1.1 trillion), China ($784 billion), and the UK ($700 billion), based on recent Treasury data. Any reduction in their appetite, possibly due to geopolitical tensions or portfolio decisions, could increase financing costs and push bond yields higher, potentially squeezing risk assets like Bitcoin. Two Possible Scenarios for Bitcoin In its report, Binance Research mentioned two possible scenarios for Bitcoin. For the first, they confirmed that persistent upward pressure on interest rates from the massive Treasury supply could dampen demand for cryptocurrencies, as higher yields make bonds more attractive.  However, if the government resorts to debt monetization by printing money to fund deficits, Bitcoin's appeal as a hedge against currency debasement could strengthen. Notably, this is likely to trigger renewed interest among market participants. Other Macro Factors Impacting Bitcoin Price Meanwhile, besides these, other macroeconomic factors will also determine Bitcoin's trajectory. Global tariff tensions continue to create uncertainties. Further, Inflation, currently at 2.5% annually per the latest CPI, remains above the Federal Reserve's 2% target. Federal Reserve Chair Jerome Powell recently warned that these tariffs could sustain higher inflation and slow growth, complicating the Fed's dual mandate of price stability and full employment.  Yesterday, April 17, Trump publicly urged Powell to cut interest rates, citing the European Central Bank's recent reduction from 2.5% to 2.25%. Trump argued that lower rates, like those in Europe, would boost U.S. competitiveness, but Powell emphasized a cautious approach. The Fed's benchmark rate, currently at 4.25%–4.5%, remains at this mark due to a pause after three cuts in 2024. Markets anticipate potential cuts starting in June 2025, with a possible 1% reduction by year-end, according to CME Group data.  Lower rates typically favor risk assets like Bitcoin by reducing the appeal of fixed-income securities. However, Powell's hawkish stance, warning of persistent inflation, has tempered expectations for immediate cuts, contributing to Bitcoin's recent price stagnation. Meanwhile, Bitcoin's price has shown resilience but lacks clear direction since April 12, trading between $86,400 and $82,700. BTC is currently seeing a 2% gain in April, rebounding from a 2.11% drop in March and a sharp 17.66% decline in February.