US National Debt Surges 1% to $36.6 Trillion, Sparking Bitcoin Concerns

The United States' gross national debt has surged to an unprecedented $36.6 trillion, marking a $367 billion increase on Monday. This significant rise follows the approval of the “One Big Beautiful Bill” by former US President Donald Trump, which raised the debt ceiling by $5 trillion on Friday. This development has sparked concerns about its potential impact on the broader economy and, more specifically, on the price of Bitcoin (BTC).

Analysts, including Kurt S. Altrichter, CRPS and founder of Ivory Hill Wealth, have expressed alarm over the US housing market. A critical metric that typically spikes during past economic downturns has now reached concerning levels. According to Altrichter, the inventory of new single-family homes is approaching 10 months’ worth of supply, a situation that has historically occurred during or right before recessions. He attributes this weakness to high interest rates and, more critically, to what he terms “demand evaporation.”

If this historical pattern holds true, the oversupply in the housing market could signal a broader economic decline, potentially weighing on risk-on assets like Bitcoin. While the long-term effect on crypto might be positive, the immediate reaction from investors tends to be risk aversion, favoring cash and short-term bonds.

Jack Mallers, co-founder and CEO of Strike, has noted that the only viable option for the US Treasury is to expand the monetary base, an action akin to printing money. Mallers argues that the government is unlikely to default on its debt, meaning debasement becomes the final resort. This scenario, he suggests, creates an ideal environment for a Bitcoin rally.

However, there is a counter-narrative: some market participants believe that Bitcoin’s recent breakout above $112,100 is unrelated to fiscal issues or recession fears. Instead, they attribute the broader stock market rally to expectations of policy shifts at the Federal Reserve. Speculation is also growing around President Trump’s potential push to replace Fed Chair Jerome Powell, which could lead to more dovish monetary policy. Trump has repeatedly urged the Fed to lower interest rates and is currently vetting candidates to succeed Powell, whose term ends in May 2026.

Despite strong net inflows into Bitcoin exchange-traded funds (ETFs) and rising institutional demand, BTC remains closely tied to broader equity markets. The correlation between Bitcoin and the S&P 500 stands at 68%, meaning both asset classes have presented similar price trends. The ongoing US import tariffs are another risk factor, potentially hurting corporate earnings, especially in the tech sector, which is heavily reliant on global trade.

Nvidia, which became the world’s most valuable company with a $4 trillion market cap, could be particularly exposed. It’s difficult to predict whether escalating trade tensions will spark a steep decline in tech stocks. While raising the debt ceiling often boosts risk-on sentiment, the threat of a recession may trigger a Bitcoin correction to $95,000. Ultimately, a new all-time high for Bitcoin in 2025 remains plausible, as noted by Strike’s Jack Mallers. But for now, traders appear to fear whether the AI-driven tech sector will weather the trade conflict.