Trump’s Big Beautiful Bill could trigger a US debt crisis and Bitcoin boom

Key takeaways:

• President Trump’s One Big Beautiful Bill could adhd implicit $2.4 trillion to the US debt, accelerating a looming indebtedness situation and spiking inflation.

• Inflation and dollar devaluation stay the way of slightest absorption successful the US economy, eroding the existent worth of currency and bonds.

• Bitcoin tin connection a hedge, but lone if held successful self-custody, arsenic custodial platforms whitethorn not past a lengthy signifier of fiscal repression.

“Devaluations typically hap reasonably abruptly during indebtedness crises.” This punctuation from Ray Dalio’s book, “The Changing World Order,” hits harder contiguous than erstwhile the billionaire hedge money manager archetypal wrote it successful 2021. And for bully reason: the US whitethorn beryllium walking consecutive into one.

The US fund shortage exceeded $6 trillion successful 2024, and Elon Musk, the erstwhile caput of the Department of Government Efficiency (DOGE), saw his efforts to chopped national spending fail, with conscionable $180 cardinal trimmed retired of the $2 trillion that helium promised. Interest rates stay astatine 4.5%, arsenic the Federal Reserve worries astir the commercialized war’s interaction connected inflation. Currently, the output connected 10-year Treasurys inactive hovers supra 4.35%.

Let’s beryllium honest: the US indebtedness spiral is deepening. What’s more, its apt catalyst passed the House connected May 22 and is present pending successful the Senate.

The Big Beautiful Bill volition punctual higher inflation

The Big Beautiful Bill has been making headlines and breaking personage bromances since aboriginal May. At implicit 1,100 pages, the measure gathers the top hits of past GOP policies: extended 2017-era taxation cuts, elimination of erstwhile President Biden’s greenish vigor incentives, and tighter eligibility for Medicaid and SNAP benefits. It besides authorizes a large enlargement of migration enforcement and raises the indebtedness ceiling by $5 trillion.

According to the nonpartisan Congressional Budget Office (CBO), the measure would chopped national gross by $3.67 trillion implicit a decennary portion reducing spending by lone $1.25 trillion. That’s a nett summation of $2.4 trillion to the already jaw-dropping indebtedness heap of astir $37 trillion. Another nonpartisan forecaster, the Committee for a Responsible Federal Budget, added that erstwhile taking involvement payments into account, the bill’s outgo could emergence to $3 trillion implicit a decennary oregon to $5 trillion if impermanent taxation cuts were made permanent.

US national debt. Source: St. Louis Fed

Some of the bill’s supporters reason that taxation cuts would stimulate the system and “pay for themselves.” However, the acquisition of the 2017 taxation cuts showed that, adjacent including affirmative economical effects, they had accrued the national shortage by astir $1.9 trillion implicit a decade, according to the CBO.

The numbers matter, but what’s unfolding is bigger than a trillion present oregon there. As Republican Senator Ron Johnson of Wisconsin enactment it, 

“The CBO people is simply a distraction. You’re arguing implicit twigs and leaves erstwhile you’re ignoring the wood that’s connected fire.”

The spiral of fund deficits and indebtedness has already sucked successful the US economy, and determination is nary credible program to reverse it.

The US cannot “grow its mode out” of debt

Some reason the US volition magically “grow its mode out” of this problem. But arsenic Sina, the co-founder of 21st Capital, noted connected X,

“To turn retired of this indebtedness without spending cuts oregon taxation increases, the US would request existent GDP maturation of 20%+ per twelvemonth for a decade.”

With Q1 2025 registering -0.3% existent GDP growth, and the US Federal Reserve estimating the Q2 2025 maturation astatine 3.8%, specified a script remains unrealistic. 

US GDP maturation rate. Source: US Bureau of Economic Analysis

As Harvard economist Kenneth Rogoff wrote successful the Financial Times, deficits are projected to transcend 7% of GDP for the remainder of Trump’s term, and that’s without a achromatic swan event.

This means that the lone maturation imaginable present is nominal.

In his book, Ray Dalio outlined the 4 tools governments person successful a indebtedness crisis: austerity, defaults, redistribution, and printing money. The archetypal 3 are achy and politically costly. The fourth, printing and devaluation, is by acold the astir likely. It’s silent, opaque, and easy disguised arsenic a stimulus. It besides wipes retired savers, bondholders, and anyone babelike connected fiat. Dalio writes,

“Most radical don’t wage capable attraction to their currency risks. Most interest astir whether their assets are going up oregon down successful value; they seldom interest astir whether their currency is going up oregon down.”

Related: Older investors are risking everything for a crypto-funded retirement

Not your keys, not your coins

This is wherever Bitcoin enters the picture—not arsenic a speculative trade, but arsenic a monetary security argumentation against the US indebtedness crisis.

If, oregon when, the US chooses to inflate its mode retired of debt, nominal Treasurys and currency volition spot their existent worth erode. Artificially suppressed involvement rates and forced enslaved purchases by institutions could further thrust existent yields into antagonistic territory.

Bitcoin is engineered to resist this outcome. With its fixed proviso and independency from authorities monetary policy, it offers what fiat cannot: a refuge from fiscal repression and currency debasement. Not to notation a output that tin enactment bonds to shame. As Bitwise analysts person noted, Bitcoin’s scarcity and resilience presumption it uniquely to payment from fiscal instability. 

However, not each Bitcoin vulnerability is equal. In a situation scenario, erstwhile the authorities tin warrant fiscal repression successful the sanction of “economic stability,” custodial risks are high. ETFs and immoderate different custodial services whitethorn simply neglect to grant redemptions. The lone existent extortion comes from self-custody, acold storage, backstage keys, and afloat control.

Rogoff enactment it plainly:

“US fiscal argumentation is moving disconnected the rails, and determination seems to beryllium small governmental volition successful either enactment to hole it until a large situation occurs.” 

So far, the Republican-controlled Congress hasn’t rejected a azygous Trump proposal, making the likelihood of the Big Beautiful Bill becoming instrumentality high. So is the likelihood of a full-blown indebtedness crisis. In that world, hard assets successful self-custody volition substance much than ever.

This nonfiction is for wide accusation purposes and is not intended to beryllium and should not beryllium taken arsenic ineligible oregon concern advice. The views, thoughts, and opinions expressed present are the author’s unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.