Elon Musk warns of $37 trillion in national debt: Why is Bitcoin the best hedge asset during a "financial emergency"?

Elon Musk, the CEO of TSL and a tech giant who was once a key aide to former US President Trump, recently announced that he will establish his own political party - the "America Party," while hinting that he still supports Bitcoin. Musk had warned last year that the scale of US debt would soar to 37 trillion dollars, which became an important reason for his effort to bring Trump back to the White House. However, due to the American Beautiful Act proposed by Trump, which raised the US debt ceiling, Musk and Trump had a disagreement. Now, as the price of Bitcoin is about to reach the level of "trillions of dollars," Bitcoin and Crypto Assets analysts predict that the price of Bitcoin will experience a big pump due to the "massive fiscal expansion" in the US.

1. The U.S. Debt Crisis: An Unstoppable Train

Financial commentator and founder of Lyn Alden Investment Strategy, Lyn Alden, stated at this year's Bitcoin conference held in Las Vegas: "Nothing can stop this train." She referenced a quote from the TV series "Breaking Bad" to describe the U.S. deficit, which will increase U.S. debt by nearly $2 trillion in 2024.

Musk pointed out that Trump "increased the deficit from the already high $2 trillion during Biden's administration to $2.5 trillion," which is the reason he decided to launch the American Party. He posted on X, stating, "This will bankrupt the country." Musk expressed that he believes President Trump and the Republican politicians who won the election last year through spending cuts have betrayed the voters who hoped to control government spending.

Investors on Wall Street and Silicon Valley are increasingly concerned about the U.S. debt issue. David Friedberg, the host of the influential podcast "All In Podcast," once invited Musk and Trump as guests, claiming: "Our country is in a fiscal emergency, but we are not addressing the issue." In recent years, due to the massive government spending during the COVID-19 pandemic and lockdowns, U.S. debt has soared, and the rapidly raised interest rates to control inflation have increased the cost of repaying the ever-expanding $37 trillion U.S. debt.

2. Trump's "Great Beauty Initiative" and the Attractiveness of Bitcoin as "Digital Gold"

This week, Trump's Great Beautiful Plan was passed in the House of Representatives. The bill aims to fundamentally reform the tax and spending landscape in the United States, providing momentum for the next phase of growth while increasing the projected $3 trillion debt and raising the debt ceiling by $5 trillion.

James Toledano, the Chief Operating Officer of Unity Wallet, stated in an email comment: "The massive fiscal expansion of the Great Beauty Act could weaken the dollar and trigger inflation, potentially enhancing the appeal of Bitcoin as 'digital gold.'" He pointed out that the recent weakness of the dollar aligns with Musk's perspective, as Musk stated, "If the U.S. does not take action on its national debt."

Bitcoin and Crypto Assets investor Lark Davis wrote in an email: "This bill is a huge warning sign for fiscal sustainability and a huge green light for risk assets, especially Crypto Assets. This is exactly why we are buying Bitcoin."

3. Historical Repetition? The Explosive Growth Expectations of Bitcoin

Davis wrote: "Historically, Bitcoin has typically achieved double-digit increases within weeks after a major spending bill is introduced. At the end of 2020, after Trump signed a significant spending bill, the price of Bitcoin rose by 38%. If Bitcoin's price trend repeats itself again, this time it will reach $150,000. Moreover, there seems to be nothing that can stop this winning train."

This perspective holds that when the government increases the money supply and inflation expectations rise through large-scale spending bills, Bitcoin, as a scarce and decentralized asset, will highlight its "digital gold" properties, attracting more capital inflows and thereby driving up the price.

Conclusion:

The continuously expanding U.S. national debt and large-scale fiscal expansion are becoming important catalysts for the explosive growth of Bitcoin prices. The dispute between Musk and Trump, although superficially a political disagreement, fundamentally revolves around the core issue of America's fiscal health. Against the backdrop of "nothing can stop this train," Bitcoin's appeal as a tool for hedging against inflation and currency devaluation will continue to strengthen. Investors are closely monitoring this macroeconomic trend, anticipating that Bitcoin will reach new price milestones in the future.