U.S. National Debt Surge Sparks Bitcoin Reserve Currency Debate

As the U.S. national debt surges past $36.9 trillion in 2025, concerns about the long-term dominance of the U.S. dollar are growing. Coinbase CEO Brian Armstrong has warned that if the U.S. does not regain control of its budget, Bitcoin could potentially replace the dollar as the world’s reserve currency. This statement has sparked a debate about the future of global finance and the role of decentralized assets.

Armstrong’s comments come in response to data highlighting the trajectory of U.S. national debt, which is projected to rise from $34.0 trillion in 2023 to $36.9 trillion in 2025. He emphasized that if Congress fails to reduce the deficit and start paying down the debt, Bitcoin could take over as the reserve currency. While Armstrong supports the U.S. economy, his remarks underscore the broader concern that a lack of fiscal discipline in Washington could erode global trust in the dollar, accelerating the shift toward decentralized alternatives.

Since World War II, the U.S. dollar has been the world’s leading reserve currency, supported by a strong economy, stable political system, and deep financial markets. Over 58% of global foreign exchange reserves are still held in USD. However, with interest on U.S. debt projected to exceed $1 trillion annually, cracks are appearing in the financial foundation. This has led to a growing interest in Bitcoin as a hedge against what many perceive as reckless fiscal policy.

Despite its growing popularity, Bitcoin faces several structural constraints. These include volatility, regulatory uncertainty, and limited usage as a medium of exchange. However, these limitations have not deterred institutions from increasing their exposure to Bitcoin. In 2025, Bitcoin’s price has stabilized above the $100,000 mark, significantly higher than its all-time high of $69,000 in 2021. The launch of multiple spot Bitcoin ETFs in both the U.S. and Asia has added legitimacy and accessibility for institutional investors.

Fidelity, BlackRock, and Ark Invest now allocate a portion of their portfolios to Bitcoin, and sovereign wealth funds from countries have reportedly tested small BTC positions. The asset is no longer just a speculative tool for retail traders—it’s entering pension fund territory. Bitcoin’s 30-day volatility has declined from 4–5% during earlier bull runs to closer to 2% in 2025, thanks to higher liquidity and institutional market-making. As the asset matures, critics who cite instability as a disqualifier are finding themselves on shakier ground.

Elon Musk has also joined the chorus of voices calling for financial reform. In a series of late-night posts, Musk criticized what he called “mammoth spending bills” passed by Congress. He warned that interest payments already consume 25% of all government revenue and that if the massive deficit spending continues, there will only be money for interest payments and nothing else. Musk, who previously advised the White House on AI strategy, also supported the idea of firing all lawmakers who backed recent omnibus spending bills, especially the Republicans who voted in favor.

Both major U.S. parties have shown little appetite for reducing entitlement spending or raising taxes—two levers that could realistically curb the debt. The result is a financial status quo: continuous deficit spending, growing debt service, and little structural reform. Against this backdrop, Bitcoin offers a fundamentally different model—one immune to central bank manipulation, capped in supply at 21 million, and operating beyond government control.

The term “hyperbitcoinization”—once confined to Bitcoin maximalist circles—is now appearing in investment memos and macroeconomic reports. Analysts have published outlooks considering Bitcoin as a “complementary asset to gold” in reserve strategies. Even the IMF, historically skeptical of crypto, recently acknowledged in a report that “a gradual erosion of trust in fiat systems could increase the use of decentralized assets in cross-border reserves and trade.”