A major shift in U.S. defense budgets could reshape the fiscal landscape. Rating agencies are flagging that proposed 2027 defense spending increases are unlikely to be funded through spending cuts elsewhere—meaning the burden will likely fall on debt expansion instead.

Here's what that translates to: higher interest payments on U.S. debt, tighter fiscal breathing room, and fewer options for policymakers down the line. When governments can't offset new spending with savings, they typically resort to borrowing. That increases competition for capital and pushes up yields across the board.

For markets, this signals sustained elevated rates and a constrained fiscal position heading into the late 2020s. Crypto investors watching macro trends should pay attention—higher government debt burdens typically correlate with currency pressures and could influence broader asset allocation strategies. The conversation around fiscal sustainability isn't just about government budgets anymore; it ripples through every asset class.