The US debt crisis is approaching. Why does Elon Musk have a bullish outlook on Bitcoin?

As the world focuses on the Federal Reserve’s next move, tech industry leader Elon Musk has spoken out again, pointing out that the United States is facing a deep economic crisis—its upcoming $38 trillion government debt is evolving into a systemic risk, which may fundamentally reshape asset allocation patterns. Musk believes that in this unavoidable economic adjustment, Bitcoin will become the biggest beneficiary.

The Systemic Dilemma Behind $38 Trillion US Debt

The expansion of US debt has not happened overnight. Since the bailout following the 2008 financial crisis, central banks around the world have embarked on a “money printing” path. The trillions of dollars in liquidity injected during the pandemic pushed this trend to the extreme, leading to sharp global inflation and disrupted supply chains.

The real concern is that the US, to pay the interest on its existing debt, the Federal Reserve has no choice but to continue injecting liquidity into the market. Once this cycle is triggered, it creates an irreversible situation—high deficits, endless money printing, runaway inflation. Economists warn that the dollar could fall into a so-called “death spiral,” where continuous currency devaluation erodes purchasing power, triggering a vicious cycle.

Musk bluntly states, “The US is significantly increasing the money supply, while the deficit is as high as $2 trillion.” This not only reflects policy passivity but also exposes long-term structural problems.

From Energy Money to Deflationary Expectations

Musk presents a compelling view: the traditional concept of money is coming to an end; the true nature of currency is energy. In his podcast interview, he emphasizes, “You can’t legislate to control energy, but you can control the supply of fiat currency.” This directly points to Bitcoin’s core value—its mechanism is entirely based on energy consumption and mathematical rules, unaffected by policy interference.

Meanwhile, Musk predicts that with the explosive development of AI technology, productivity will surge significantly within three years, and the supply of goods and services may outpace inflation, leading the economy toward deflation. In this environment, traditional debt burdens will become heavier, while assets with scarcity and independence—such as Bitcoin and gold—will serve as the most effective risk hedging tools.

A New Wave in Asset Hedging

The market has already sensed this shift. Wall Street investors and retail investors are actively reallocating into so-called “anti-devaluation trades,” shifting funds into assets like gold and Bitcoin that have inherent scarcity, to hedge against currency depreciation and inflation risks. Musk’s companies, Tesla and SpaceX, already hold nearly $2 billion worth of Bitcoin, and despite a recent correction from the October 2022 high of $126,000 to the current $89,960, Bitcoin still demonstrates long-term resilience.

This change in asset allocation reflects deep mistrust in the fiat currency system. In contrast, Bitcoin’s fixed supply and inability to be increased, along with fully decentralized blockchain assets that cannot be frozen, are being reevaluated for their value.

Musk’s Evolving and Steadfast Position

Musk’s political interactions with Trump once moved markets. He led efforts to “streamline government efficiency” to address debt issues, but with limited success, and their relationship cooled. After stepping back from the political spotlight, Musk’s stance has become more resolute: his “American Party” will embrace Bitcoin rather than the dollar, and he openly states, “The fiat currency system is beyond saving.”

This not only reflects his personal philosophical stance but also mirrors the deep skepticism of tech elites toward the current financial system. Although his enthusiasm for cryptocurrencies waned somewhat after the pandemic, he continues to support Bitcoin and Dogecoin (DOGE) in the face of systemic economic risks.

Asset Reallocation Amid US Debt Crisis

Looking ahead, the deepening US debt crisis has become a market consensus. Regardless of policy adjustments, it will be difficult to fundamentally reverse this trend in the short term. Against this backdrop, investors are quietly shifting assets—from traditional fiat currencies and government bonds—to assets with independence and scarcity.

Bitcoin’s role in this process is becoming clearer: it is both a hedge against currency risk and a symbol of disillusionment with the existing financial system. Musk’s views may be somewhat radical, but the underlying economic logic—debt unsustainability, the cost of money printing, and the revaluation of scarce assets—is increasingly accepted by market participants.