October 15, 2026 • 3 min read • 1 min view
The U.S. 10-year Treasury rate recently reached its highest level observed during bitcoin’s history. This comes as U.S. federal debt continues to climb to new all-time highs, exceeding $40 trillion. Higher interest rates are increasing the government’s borrowing costs, and this interest expense is now the nation’s second largest line item in the federal budget, recently passing Medicare.1
This dynamic raises an important question for investors: How sustainable are current fiscal trends, and what implications may they have for long-term asset allocation decisions?
Rising Rates, Rising Debt, and Bitcoin's Emerging Role
Historically, bitcoin has largely been uncorrelated with 10-year real rates. However, in recent years this correlation has begun to trend positively. The chart “U.S. Treasury Rates and Bitcoin” demonstrates the recent uptick in the correlation between 10-year real rates and bitcoin’s market cap, reaching a new all-time high above 0.6 in 2026.
Bitcoin was created following 2008’s global financial crisis, and some investors view it as a store of value during periods of fiscal stress. With interest rates in the U.S. now reaching levels not seen since 2007, bitcoin may increasingly be viewed as a portfolio diversifier during periods of high sovereign debt and fiscal intervention from the federal government.
Bitcoin's protocol enforces a fixed supply cap of 21 million and a transparent monetary issuance schedule. As concerns around debt levels, government spending, and long-term purchasing power continue to grow, bitcoin's scarcity and predictable supply may strengthen its appeal as a potential hedge against currency debasement.
Recent market behavior may suggest that both the bond market and bitcoin are increasingly responding to concerns surrounding government debt levels and the growing cost of financing that debt. Bitcoin is up nearly 30% in the last two months, while 10-year Treasury rates are up more than 10% over the same period.
If current debt and rate trends persist, it may not be long before the interest expense becomes the largest line item in the federal budget, further elevating focus on alternative stores of value.
To discuss these trends and the potential role of digital assets within an institutional portfolio, get in touch with our team.
1Fiscal Data, How much has the U.S. government spent this year?, accessed September 24, 2026, https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/
The information herein was prepared by Fidelity Digital Assets, National Association (“FDA, NA”) and Fidelity Digital Assets, Ltd (“FDA, LTD”). It is for informational purposes only and is not intended to constitute a recommendation, investment advice of any kind, or an offer to buy or sell any asset. Perform your own research and consult a qualified advisor to see if digital assets are an appropriate investment option.
Digital assets are speculative and highly volatile, can become illiquid at any time, and are for investors with a high risk tolerance. Investors in digital assets could lose the entire value of their investment. Digital assets are not insured or guaranteed by the Federal Deposit Insurance Corporation, or any other government agency, and are not obligations of any bank.
Custody and trading of digital assets are provided by FDA, NA, which is a national trust bank. FDA, LTD relies on FDA, NA for these services. FDA, LTD is registered with the Financial Conduct Authority under the U.K.’s Money Laundering Regulations. The Financial Ombudsman Service and the Financial Services Compensation Scheme do not apply to the cryptoasset activities carried on by FDA, LTD.
To the extent this communication constitutes a financial promotion in the U.K., it is issued only to, or directed only at, persons who are: (i) investment professionals within the meaning of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO"); (ii) high net worth companies and certain other entities falling within Article 49 of the FPO; and (iii) any other persons to whom it may lawfully be communicated.
This information is not intended for distribution to, or use by, anyone in any jurisdiction where such distribution would be contrary to local law or regulation. Persons accessing this information are required to inform themselves about and observe such restrictions.
FDA, NA and FDA, LTD do not provide tax, legal, investment, or accounting advice. This material is not intended to provide, and should not be relied on, for tax, legal, or accounting advice. Tax laws and regulations are complex and subject to change. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.
Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Digital Assets or its affiliates. Fidelity Digital Assets does not assume any duty to update any of the information.
Fidelity Digital Assets and the Fidelity Digital Assets logo are registered service marks of FMR LLC.
© 2026 FMR LLC. All rights reserved