- Ray Dalio warned that the U.S. debt could devalue wealth linked to the US dollar.
- Crypto leaders viewed the fiscal chaos as a bullish catalyst for BTC.
Bitcoin [BTC] bullish calls featured extensively on Crypto Twitter as U.S. debt concerns hit headlines after the passage of the tax and spending bill on the 3rd of July.
According to estimates, the bill is expected to add more than $3 trillion in the next 10 years.
But, Ray Dalio, founder of hedge fund Bridgewater Associates, noted that the debt could spiral out of control if the bill is implemented as it is.
He warned that within the next 10 years, the debt burden on the average American family could become unsustainable.
The likely consequences? Higher taxes, reduced government spending, or increased money printing. This could erode the value of the U.S. dollar and hurt those who rely on it to preserve their wealth.
He stated,
“This printing and devaluing is not good for those holding bonds as a storehold of wealth, and what’s bad for bonds and US credit markets is bad for everyone.”
Source: Ray Dalio/X
The perfect storm for BTC?
This likely fiscal chaos and fall-out is exactly why Bitcoin exists, claimed crypto leaders.
As a fixed supply digital asset, it becomes a relatively better store of value compared to traditional currencies like the US dollar.
These currencies have an infinite supply and are printed at will by central banks. In short, BTC, gold, and other scarce commodities would be in demand.
Reacting to Dalio’s warning, Bitwise CIO Matt Hougan urged users to ‘buy Bitcoin.’
Raoul Pal of Real Vision also echoed Hougan’s stance, adding that only tech and crypto are better hedges in such a devaluation scenario.
“Debasement hedges in secular bull markets – there are only two that significantly outperform: tech and crypto.”
Although Dalio has publicly admitted to owning some BTC, he is more inclined towards gold.
He said that it’s easier to track gold price moves, especially due to conflicts. But he found it difficult to do the same on the BTC price, concluding that it still acts as a speculative interest.
For BlackRock’s Larry Fink, however, BTC is a digital gold. In fact, he warned in April that it could easily replace the US dollar as the world’s reserve currency if the fiscal debt isn’t managed.
Even so, Treasury Secretary Scott Bessent downplayed the debt concerns linked to the spending bill.
“We are growing GDP faster than debt, and that trend will continue through the remainder of the President’s term.”
Meanwhile, Coinbase analysts warned that the ‘Big Beautiful Bill’ has a $5 trillion increase in the debt limit.
As a result, the U.S. Treasury could refill (borrow money from the market) its main cash account or TGA (Treasury General Account), and squeeze liquidity, dragging risk assets, including BTC.
“This TGA replenishment could potentially drain liquidity from the broader market in the short term, posing a notable downside risk for all risk assets.”
