Why would sovereign nations want to hold US government debt if they know they will be repaid in devalued dollars?

Bitcoin is a much better solution for long-term savings.

Example:

If you hold $100 billion of US debt for 30 years, you'll be paid back in dollars that are worth SIGNIFICANTLY less. You'll get interest payments along the way.

Right now, 30-year Treasury rates are around 4.34%. If the money supply is inflated by 7% on average over that time (this number has historically been much higher - it keeps up with the S&P 500), the bondholder would lose ~2.7% to inflation per year!

In 30 years, at maturity, the bondholder would receive $100 billion (in nominal terms). The holder would also receive ~$130 billion in annual interest payments throughout the 30 years.

The $100 billion payout has a present value of $11.3 billion. The interest payments have a present value of $51.1 billion, so the bond is actually worth only $62.4 billion in present value terms.

The bondholder would have LOST ~$37.6 BILLION by saving in US treasuries.

Why would you pay $100B for something worth only $62.4B?

If the investor put 5% of their portfolio in Bitcoin - $5 Billion in Bitcoin and 95 billion in bonds - their portfolio would perform SIGNIFICANTLY better.

Bitcoin has historically returned 100%+/year, but let's be conservative and say it will return 20%/year for the next 30 years.

The 5% allocation would be worth $1.19 trillion. The portfolio would be worth almost $1.8 trillion.

Instead of taking a compounded -1.5% annually (a 1.5% loss),

The portfolio would have returned 10.1% annually (a 10.1% gain).