11/03 update below. This post was originally published on November 2
Elon Musk, the Tesla billionaire whose electric car company holds more than $1 billion worth of bitcoin, has again warned the U.S. is hurtling toward bankruptcy (just as U.S Treasury secretary Scott Bessent issued a surprise bitcoin endorsement).
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Musk, who has set crypto alarm bells ringing by moving some of the near-$1 billion worth of bitcoin he also controls via his rocket company SpaceX, helped U.S. president Donald Trump back into the White House last year with his dire warnings of imminent financial catastrophe.
Now, as traders brace for the “mother of all” Federal Reserve pivots, Musk has warned it’s not possible to solve the U.S. debt crisis without growing the economy at a fantastic pace—something that bitcoin supporters think will blow up the bitcoin price.
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Tesla billionaire Elon Musk, the founder of Tesla and SpaceX, has warned the U.S. is heading for bankruptcy—something many bitcoin supporters think could turbo-charge the bitcoin price.
Anadolu Agency via Getty Images
“It would be accurate to say that even unless you could go like super draconian … on cutting waste waste and fraud which you can’t really do in a democratic country then …. there’s no way to solve the the the debt crisis,” Musk told podcaster Joe Rogan.
U.S. debt has skyrocketed in recent years following huge government spending through the Covid-era and lockdowns, with interest rates that were rapidly hiked to rein in inflation adding to the cost of servicing the ballooning $38 trillion U.S. debt pile.
“The interest on a national debt is bigger than the entire the entire military budget and growing. This is crazy,” Musk told Rogan during their marathon, three-hour conversation.
11/03 update: The bitcoin price has fallen sharply over the last 24 hours, reigniting fears of a bitcoin crash to under $100,000.
“The crypto market continues to face vulnerability as persistent geopolitical tensions and unexpected macro shocks could still trigger sharp corrections,” Maria Carola, chief executive of bitcoin and crypto exchange StealthEX, said in emailed comments.
“In October, the market had already experienced a series of sharp crashes, caused not so much by macro factors as by internal liquidity imbalances. A system in which the fate of the price depends on liquidation algorithms and derivatives volumes remains vulnerable. If the U.S. shutdown continues and the Fed fails to set a clear rate stance, the likelihood of a repeat test of $100,000 remains high.”
Following a bitcoin price “flash crash” last month, analysts have warned that similar swings could trigger another round of “massive” liquidations.
“The market structure remains fragile,” Farzam Ehsani, the chief executive of Valr, said via email.
“A 10% move in either direction could trigger massive liquidations—roughly $11.39 billion in short positions if the price rises, or $7.55 billion in longs if it falls. This concentration of liquidations creates a powder keg effect and heightens the market’s sensitivity to broader news. Any change in the Fed’s tone or a new round of geopolitical tension could dramatically shift the balance of power.”
Musk, who joined the Trump administration via his Doge department of government efficiency, dramatically fell out with president Donald Trump earlier this year over Trump’s signature tax and spend bill that’s expected to add trillions of dollars to the national debt over the next decade.
Musk then confirmed speculation his new America Party would adopt bitcoin, calling the U.S. dollar and other so-called fiat currencies that aren’t backed by assets, “hopeless.”
However, Musk appears to have since all-but given up on the idea of preventing the U.S. from falling into “bankruptcy” via cost-cutting.
“Even if you implement all these savings, you’re only delaying the day of reckoning for when America goes bankrupt,” Musk said.
“I came to the conclusion that the only way that the only way to get us out of the debt crisis and to prevent America from going bankrupt is AI and robotics. We need to grow the economy at a rate that allows us to pay off our debt.”
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The bitcoin price has rocketed higher over the last few years, rising along with the soaring U.S. debt pile.
Forbes Digital Assets
The spiraling U.S. debt pile topped $38 trillion last month, up $500 billion in October alone, according to analysts with The Kobeissi Letter.
“It is a horrible, no good situation,” Anthony Pompliano, a bitcoin and crypto influencer and the chief executive of Professional Capital Management, wrote in an emailed note.
“The only thing I know to do is opt-out of the broken system with some portion of my economic value. The higher the national debt goes, the higher bitcoin will go. And it doesn’t appear either of them will stop any time soon.”
The bitcoin price has soared in recent years alongside the swelling U.S. debt pile, with traders this year naming its rally along with gold as the “debasement trade.”
“In the long term, the investment case for bitcoin and other risk assets remains intact,” Nic Puckrin, investment analyst and cofounder of The Coin Bureau, said via email.
The bitcoin price topped $126,000 per bitcoin in early October but has failed to maintain the rally that’s seen it more than double from its 2024 lows, dropping back as traders pile into gold and stocks while the U.S. Federal Reserve gears up to further cut interest rates and loosen its monetary policy.
“We’re seeing easing monetary conditions across the globe—not just the U.S.—so fiat currency debasement is inevitable,” Puckrin said. “In the short term, though, volatility still reigns supreme. Any trader considering high leverage in this market should think long and hard before committing.”