The US federal debt has reached a record $37 trillion, adding fuel to calls that rising deficits and potential money supply growth may underpin a Bitcoin rally to $132,000 by year’s end.
“Thanks to the One Big Beautiful Bill Act, the debt just officially passed the $37 trillion mark,” said Representative Thomas Massie in a Wednesday X post.
The US deficit has risen to its latest record high a month after US President Donald Trump signed the One Big Beautiful Bill Act into law on July 4, which he said would cut as much as $1.6 trillion in federal spending.
Analysts said swelling deficits can eventually prompt looser policy, including quantitative easing, which is large-scale bond purchases by central banks that inject liquidity into the financial system.
Bitcoin advocates argue that a growing money supply and rising inflation concerns may lead to a renewed recognition of Bitcoin’s (BTC) monetary scarcity, pushing the world’s first cryptocurrency to new all-time highs.
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Analysts outline path to $132,000
US Treasury data shows that US debt soared from $26.7 trillion in 2020 to over $37 trillion, marking a 38% increase in just five years.
Bitcoin rose over 925% during the same period, with its historic price growth “directly correlated” with US debt, according to Ryan Lee, chief analyst at Bitget crypto exchange.
“Ultimately, this will impact the American monetary system as a considerable amount of cash will be deployed into servicing this debt,” he said.
“The more the debt grows, the higher the likelihood of BTC price soaring to new highs.”
Moreover, the US government may also start exploring Bitcoin to fix its “massive national debt,” said Lee, adding that the “odds are stacked in favor of Bitcoin.”
Elon Musk criticized the spending bill in a June 5 X post, warning that it would “increase the deficit to $2.5 trillion.”
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Servicing the debt may also lead to an increase in the global M2 money supply, which could be the next significant catalyst for Bitcoin’s price.
Based on its correlation with BTC, the growing money supply could push Bitcoin above $132,000 before the end of 2025, according to estimates from Jamie Coutts, chief crypto analyst at Real Vision.
The rising inflation and increase in M2 money supply may catalyze Bitcoin’s rally to the $132,000 high before the end of 2025, based on its correlation with the fiat supply.
Still, this estimate remains modest compared to perspectives shared by Arthur Hayes, co-founder of BitMEX and chief investment officer at Maelstrom, who predicted Bitcoin could climb to $250,000 if the US Federal Reserve pivots to QE, due to growing inflationary pressures.
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