- Rising U.S. debt is fueling concerns over the dollar’s global dominance.
- Trump-backed spending bill deepens political divides and economic fears.
- Bitcoin is gaining traction as a strategic reserve amid fiscal instability.
The massive debt the U.S. now has has sparked concerns about the country’s economic future and renewed debates among those in charge of economic decisions about what will happen to the U.S. dollar.
On Tuesday, Coinbase CEO Brian Armstrong noted that rising federal debt might weaken the place of the U.S. dollar among global currencies. He warned that if politicians go on increasing spending, Bitcoin, considered decentralized and safe from inflation, might displace the US dollar as the world’s main reserve currency.
“Bitcoin holds great interest for me, yet I also believe in America’s importance for the world,” said Armstrong. We should get better organized with our money.
Trump-Backed Spending Bill Sparks Political Tensions
Senator Grassley’s comments were made at a time when there are rising political issues in Washington because House Republicans are backing a funding bill favored by Trump. According to the legislation, taxes would continue to be reduced, more money would be put into the military and Medicaid, nutritional assistance and clean energy support would be cut significantly.
Those for the bill maintain it will boost the economy and strengthen the military, while opponents believe it might worsen the debt issue. Paul Krugman, Joseph Stiglitz and four other Nobel Prize-winning economists wrote that if everything in the bill is made permanent, it could increase the deficit by up to $3 trillion.
Because of the rising debt, many are once again talking about Bitcoin as a way to safeguard against economic troubles. The creators of Bitcoin, inspired by the 2008 financial crisis, made it with a fixed number of coins and a way to resist inflation and these traits make it more popular with investors these days.
Bitcoin Reserve Proposal Gains Momentum After Election
Elon Musk, as head of Tesla and an objector to large government spending, described the new law as “a Congressional spending bill full of pig-shaped spending for many pet projects” and called it “an abomination.”
Because of growing budget concerns, some legislators have begun to think about changing policies and this includes studying the idea of including Bitcoin in the nation’s strategic reserves.
Earlier in 2022, Senator Cynthia Lummis sponsored a bill to create a Bitcoin Strategic Reserve for the U.S. The proposal, received greater attention after Donald Trump’s election in 2024, suggests that the government should collect 1 million BTC which amounts to 5% of its set total, gradually.
If the proposal went ahead, the government would use assets from the Treasury to finance bitcoin transactions. The country’s digital assets would be put into special secure vaults on a decentralized network, much like its gold reserves are now.
He said that shifting into gold would guard American people against the dollar’s weakening and future inflation. Ms. McEnany pointed out that bold moves are needed for the economy and called Bitcoin a “modern form of saving money.”
President Trump seems to be increasingly siding with suggestions to make the United States the global leader in crypto. Due to rising costs and worrying economic conditions, Bitcoin may be integrated into a nation’s main economic planning soon.
