As the US edges closer to a potential debt crisis, Bitcoin is emerging as a compelling hedge for investors wary of inflation and currency devaluation. President Trump’s “One Big Beautiful Bill,” currently pending in the Senate, could add over $2.4 trillion to the national debt, intensifying concerns about fiscal stability and the future of the US dollar.
What’s in the Bill and Why It Matters
The proposed legislation bundles extended tax cuts, reversals of green energy incentives, and stricter eligibility for social programs, while also raising the debt ceiling by $5 trillion. According to the Congressional Budget Office, the bill would reduce federal revenue by $3.67 trillion over a decade, offset by only $1.25 trillion in spending cuts—a net increase of $2.4 trillion to the federal debt . If temporary tax cuts become permanent, the cost could rise even further.
While supporters argue that tax cuts will stimulate economic growth, historical data from the 2017 tax cuts suggest otherwise: the deficit increased by nearly $1.9 trillion over ten years, even after accounting for economic gains.
Why the US Can’t Grow Out of Its Debt
Some policymakers claim that robust economic growth could offset rising debt. However, with real GDP growth at -0.3% in Q1 2025 and only a modest rebound expected, the US would need an unrealistic 20%+ annual growth for a decade to balance the books . As Harvard economist Kenneth Rogoff notes, deficits are projected to exceed 7% of GDP for the foreseeable future, even without unexpected shocks.
Inflation and Devaluation: The Path of Least Resistance
With few politically viable options—such as austerity or tax hikes—available, printing money and devaluing the currency becomes the most likely route. This approach erodes the real value of cash and bonds, punishing savers and bondholders while providing temporary relief to government finances.
Ray Dalio, in his book “The Changing World Order,” warns that devaluations often happen abruptly during debt crises, catching most investors off guard. As he puts it, “Most people don’t pay enough attention to their currency risks. Most worry about whether their assets are going up or down in value; they rarely worry about whether their currency is going up or down.”
Bitcoin: A Modern Hedge Against Financial Repression
In this environment, Bitcoin stands out for its fixed supply and independence from government monetary policy. Unlike fiat currencies, Bitcoin cannot be devalued by political decisions, making it an attractive option for those seeking protection from inflation and financial repression.
However, the article emphasizes that not all Bitcoin exposure is created equal. In a true crisis, custodial platforms—such as ETFs or exchanges—may face government intervention or fail to honor withdrawals. True protection comes from self-custody: holding your own private keys and storing Bitcoin securely offline .
Market Reactions and the Road Ahead
Wall Street’s response to the bill has been cautious, with bond yields rising and doubts growing about the long-term safety of US Treasurys as a haven asset . As fiscal uncertainty deepens, demand for Bitcoin and other hard assets is likely to increase, especially among those seeking to diversify away from traditional financial instruments.
As the bill moves through Congress, the debate over America’s fiscal future—and Bitcoin’s role as a hedge—will only intensify. For now, the message is clear: in a world of rising debt and inflation, digital assets like Bitcoin are gaining new relevance for investors looking to safeguard their wealth.
