As concerns over the growing U.S. national debt intensify, Bitcoin (BTC) is once again in the spotlight across Crypto Twitter, with analysts and investors eyeing the digital asset as a potential hedge against fiscal instability.
The renewed interest follows the passage of a sweeping tax and spending bill on July 3, which is projected to add more than $3 trillion to the national debt over the next decade. Critics argue that the bill’s long-term economic impact could be severe unless substantial changes are made.
Ray Dalio, founder of Bridgewater Associates, voiced stark warnings, suggesting that if the bill moves forward in its current form, the average American household may face an unsustainable debt burden within the next ten years. According to Dalio, this could prompt drastic measures such as increased taxation, reduced government spending, or extensive money printing—each of which may diminish the purchasing power of the U.S. dollar.
“This kind of printing and devaluing isn’t good for those holding bonds as a store of wealth,” Dalio cautioned. “And what’s bad for bonds and U.S. credit markets is ultimately bad for everyone.”
Bitcoin: A Modern Hedge Against Monetary Debasement?
Dalio’s commentary ignited debate among crypto proponents who argue that Bitcoin was designed for precisely this kind of economic turmoil. With a capped supply of 21 million coins, Bitcoin is increasingly being viewed as a superior store of value compared to fiat currencies, which can be printed endlessly by central banks.
Matt Hougan, Chief Investment Officer at Bitwise, reacted to the news with a simple message: “Buy Bitcoin.” Raoul Pal, founder of Real Vision, echoed this sentiment, stating that technology stocks and cryptocurrencies remain the best performing hedges in prolonged periods of currency debasement.
“In long-term secular bull markets driven by currency erosion, only tech and crypto have historically delivered significant outperformance,” Pal explained.
Although Dalio has previously acknowledged owning a small amount of BTC, he maintains a preference for gold, citing its historical performance and easier predictability during geopolitical conflicts. Still, others such as BlackRock CEO Larry Fink have taken a more optimistic stance on Bitcoin, calling it “digital gold.” In April, Fink warned that if the U.S. fails to manage its debt responsibly, BTC could potentially challenge the U.S. dollar’s status as the world’s reserve currency.
Mixed Signals from U.S. Officials
Despite growing concerns, Treasury Secretary Scott Bessent dismissed fears surrounding the spending bill. “Our GDP is growing faster than our debt, and that trend will continue for the remainder of the President’s term,” Bessent stated confidently.
However, analysts at Coinbase offered a more cautious outlook. They estimate that the new legislation could increase the federal debt ceiling by up to $5 trillion. This could force the U.S. Treasury to borrow aggressively to replenish its Treasury General Account (TGA)—a move that may tighten market liquidity and pressure risk assets, including cryptocurrencies.
“The TGA refill process may drain liquidity from financial markets in the near term,” Coinbase warned. “This presents a significant downside risk for risk assets such as Bitcoin.”
As economic uncertainty looms and fiscal policy becomes increasingly contentious, Bitcoin continues to gain ground as both a speculative asset and a potential refuge from monetary instability.
