Billionaire Michael Bloomberg Warns on US Debt, Which Could Be a Tailwind for Bitcoin Price

Billionaire Michael Bloomberg has warned that the US faces a major reckoning as public debt and deficit surges.

Billionaire Michael Bloomberg, the founder of the eponymous company, has warned that the U.S. faces a major reckoning as public debt and deficit surge.

Bloomberg was responding to a Congressional Budget Office (CBO) report that estimated that public debt will hit 100% of GDP this year and 118% in the next decade.

In his opinion piece, he argued that the U.S. could face a grim fiscal reckoning if Congress fails to act to reduce spending. However, Congress and the Trump administration are implementing policies that may worsen the debt situation.

Trump wants to deliver more tax cuts and partially pay for them through tariffs. The implication is that the tax cut will be so big such that tariffs will not fill the gap.

There is also a concern that the U.S. could move into a recession as Goldman Sachs and PIMCO have predicted. A recession at a time when debt is rising would lead to a higher debt-to-GDP ratio over time.

“Higher tariff revenues won’t come close to balancing the books. In fact, the impact on overall revenue is likely to be negative, because tariffs depress commercial activity and job creation,” Bloomberg wrote.

A Debt Crisis Would Benefit Bitcoin Price

A debt crisis in the U.S. would benefit safe havens, which explains why the price of gold has surged to a record high. Bitcoin price would also benefit since it is often seen as a digital version of gold.

Indeed, despite recent outflows, spot Bitcoin ETFs have had a net inflow of over $700 million this year and $36 billion since January 2024. That is a sign that investors see it as a safe-haven asset.

To some extent, Bitcoin is better than gold since it has a fixed supply cap and is seeing more adoption by companies like MetaPlanet, Grayscale, Trump Media, and Tesla.

BTC Price Analysis: Can it Retest ATH

Short-term Bitcoin price charts suggest that the coin is on the cusp of a bearish breakdown, potentially to $70,000. However, the weekly chart shows that the recent retreat is a mere pullback inside an ascending channel. For example, BTC dropped from the upper side of this channel in March last year to its lower between August and November.

It is worth noting that the BTC price has remained stubbornly above the 50-week Exponential Moving Average, a sign that the uptrend is intact. Therefore, there is a likelihood that the Bitcoin price will rebound and retest the all-time high of $109,300 later this year as U.S. debt fears rise.

The bullish BTC price forecast will become invalidated if the coin crashes below the 50-week moving average at $77,800. Such a move would lead to a big drop, potentially to the psychological point at $50,000.