Key Points:

President Trump's "Big Beautiful Bill" is expected to increase U.S. debt by over $2.4 trillion, accelerating the imminent debt crisis and triggering a surge in inflation.

Inflation and the devaluation of the dollar remain the least resistant paths facing the U.S. economy, which will continue to erode the real value of cash and bonds.

Bitcoin can provide effective hedging protection, but it must be self-custodied, as custodial platforms may struggle to survive during prolonged financial repression.

"Currency devaluation often occurs quite suddenly during a debt crisis." This insight from Ray Dalio's book "The Changing World Order" is more resonant today than when the billionaire hedge fund manager first wrote it in 2021. The reason is clear: the U.S. may be heading directly toward such a crisis.

The U.S. budget deficit for 2024 has surpassed $6 trillion, and former government efficiency chief (DOGE) Musk's attempts to cut federal spending have failed, achieving only $180 billion of the promised $2 trillion in cuts. With the Federal Reserve concerned about the potential impact of trade wars on inflation, interest rates remain at 4.5%. Currently, the yield on 10-year U.S. Treasury bonds remains above 4.35%.

It is no exaggeration to say that the U.S. debt spiral is accelerating into the abyss. More critically, its potential catalyst was passed in the House on May 22 and is now awaiting a vote in the Senate.

Since early May, the "Big Beautiful Bill" has dominated headlines and has broken friendships among various celebrities. This over 1,100-page bill consolidates the essence of past Republican policies: extending the tax cuts from the 2017 era, repealing the green energy incentives implemented by former President Biden, and tightening eligibility for Medicaid and SNAP food assistance programs. The bill also authorizes a significant expansion of immigration enforcement and raises the debt ceiling by $5 trillion.

According to analysis from the nonpartisan Congressional Budget Office (CBO), the bill will reduce federal revenue by $3.67 trillion over ten years while only cutting spending by $1.25 trillion. This means a net increase of $2.4 trillion to the already staggering nearly $37 trillion total debt. Another nonpartisan forecasting agency, the "Committee for a Responsible Federal Budget," further points out that when considering interest payments, the total cost of the bill could rise to $3 trillion over ten years, and if temporary tax cuts become permanent, the cost could even reach $5 trillion.

Some supporters of the bill argue that the tax cuts will stimulate economic growth and "pay for themselves." However, the actual experience of the 2017 tax cuts shows that even accounting for positive economic effects, according to CBO data, these tax cuts still increased the federal deficit by nearly $1.9 trillion over a decade.

While specific numbers are important, the crisis currently unfolding is far more severe than just a few trillion dollars more. As Wisconsin Republican Senator Ron Johnson pointed out: "Focusing on the CBO score is just a distraction. When the whole forest is burning, you’re arguing about branches and leaves."

The spiraling growth of budget deficits and debt has deeply consumed the U.S. economy, and there is currently no credible plan to reverse this crisis.

Some believe that the U.S. will miraculously "grow" its way out of this problem. But as Sina, co-founder of 21st Capital, pointed out on the X platform: "To escape debt without cutting spending or raising taxes, the U.S. needs to achieve over 20% real GDP growth every year for ten consecutive years."

With a recorded -0.3% real GDP growth rate in the first quarter of 2025, and the Federal Reserve estimating a growth rate of 3.8% for the second quarter of 2025, this scenario is clearly unrealistic.

Harvard economist Kenneth Rogoff noted in the Financial Times that during the remainder of Trump's term, the fiscal deficit is expected to exceed 7% of GDP, even without a black swan event occurring.

This means that the only growth that is currently achievable is nominal growth.

In his writings, Ray Dalio outlined four tools that governments can use during a debt crisis: austerity, default, wealth redistribution, and printing money. The first three measures are painful and politically costly. The fourth option, printing money and currency devaluation, is the most likely to be adopted. It is silent, opaque, and easily packaged as economic stimulus. It will also erode the wealth of savers, bondholders, and anyone relying on fiat currency. Dalio wrote: "Most people fail to adequately consider the currency risks they face. Most only worry about the ups and downs of asset values, rarely considering the appreciation or depreciation of the currency they hold."

This is precisely the moment for Bitcoin to emerge—it is not just a speculative trading tool but a monetary insurance policy against the U.S. debt crisis.

If or when the U.S. chooses to escape debt through inflation, the real value of nominal government bonds and cash will gradually be eroded. Artificially suppressed interest rates and policies forcing institutions to buy bonds may further push real yields into negative territory.

The design philosophy of Bitcoin is precisely capable of resisting such outcomes. With its fixed supply and independence from government monetary policy, it offers a safeguard that fiat currency cannot provide: a haven unaffected by financial repression and currency devaluation. Not to mention its yields are sufficient to overshadow traditional bonds. Bitwise analysts point out that Bitcoin's scarcity and resilience give it a unique advantage during fiscal turmoil.

However, not all methods of holding Bitcoin are equally secure. In a crisis scenario, when the government implements financial controls in the name of "economic stability," custodial risks will significantly increase. ETFs and other custodial services may not meet redemption demands. The only true safeguard comes from self-custody, cold storage, private key control, and complete autonomy.

Rogoff candidly stated: "U.S. fiscal policy is out of control, and both parties seem to lack the political will to address this issue until a major crisis truly erupts."

So far, the Republican-controlled Congress has not rejected any of Trump's proposals, making the likelihood of the "Big Beautiful Bill" becoming law extremely high. At the same time, the possibility of a full-blown debt crisis is also increasing. In such a world, self-custodied hard assets will be more important than ever.

Related: Bitcoin price patterns suggest a bull market trap, potentially leading BTC to fall below $100,000.

This article is for general reference only and should not be considered legal or investment advice. The views, thoughts, and opinions expressed in the article are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Original article: “Trump's 'Big Beautiful Bill' Could Trigger U.S. Debt Crisis and Bitcoin (BTC) Surge”

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