A rising cost to insure U.S. government debt against default is raising alarm bells in the financial markets, and experts are watching closely to see how it affects crypto. The price of credit default swaps (CDS) – a type of insurance that protects investors from a bond issuer’s failure – has increased dramatically. This surge signifies growing uncertainty about the U.S.’s financial health. 6-Month CDS on U.S. Treasuries has gone up to over $51,000 per year for every $10 million in investment coverage. While tariffs played a role in the initial jump, analysts believe that this increase reflects more deep-rooted problems with the U.S.’s fiscal health. 6 months ago it was just $29,000. This spike comes at a time when political gridlock and inability to pass meaningful fiscal reform has eroded trust and confidence in the US’s ability to manage its finances effectively. With the national debt topping $36.5 trillion in early 2025, interest payments alone took up nearly 15% of federal revenue in 2024. The combination of a high debt-to-GDP ratio and years of budget deficits is creating a worrying picture for investors. In response to the rising CDS, market sentiment has shifted, with some experts suggesting crypto could become an attractive alternative for those seeking to safeguard their investments against the potential fallout of U.S. financial instability. The rise of credit default swaps (CDS) in the U.S. government bond market is a significant warning sign. As traditional assets like bonds are becoming increasingly less trustworthy, investors might turn towards more volatile but potentially safer options such as Bitcoin. However, there’s another side to this story. A potential downside for crypto is a broader financial instability caused by U.S. debt worries. This could lead to decreased liquidity and volatility in the crypto market. Looking ahead, whether the U.S. can address its fiscal challenges or not, will have a profound impact on the cryptocurrency space. The message from CDS markets is clear: without significant reforms, confidence in America’s ability to manage its debt may continue to decline, potentially leading to greater instability in the global financial system. For crypto investors, this presents both an opportunity and a challenge.