Bitcoin is rallying on US deficit concerns, not hype

Bitcoin is being positioned as a primary defense against a looming US financial crisis, next to gold, and is likely one of the main drivers fueling its current rally, according to an analyst. 

Bitcoin (BTC $122,452) just topped $121,000 in a new record high on Monday, “but this rally isn’t driven by hype — it’s fueled by something far deeper,” 10x head of research Markus Thielen said in a note shared with Cointelegraph.

Thielen said Bitcoin has transformed from a tech story into a macro asset, specifically a hedge against US fiscal irresponsibility.

“The narrative has completely shifted: no one is talking about blockchain use cases or Bitcoin’s technological promise anymore,” Thielen said, adding “Bitcoin has become a macro asset, a hedge against unchecked deficit spending.”

US’s $7 trillion deficit swing 

US President Donald Trump’s “One Big Beautiful Bill Act” (OBBBA) was passed in July, raising the debt ceiling by $5 trillion, the largest single increase in US history.

Instead of the promised $2 trillion deficit reduction, the bill could add $2.3 trillion and $5 trillion to federal deficits over the next decade. This creates a potential $7 trillion swing from initial expectations, said Thielen. 

With deficit spending showing no signs of slowing and monetary policy turning more accommodative through projected rate cuts, Bitcoin is positioned as the “ultimate beneficiary” of this macro environment, he said. 

This isn’t just another crypto rally, “it’s a direct response to a US fiscal landscape unraveling far quicker than expected,” he said.

“Alongside gold, Bitcoin is now positioned as the primary defense against a looming fiscal crisis — and that crisis is rapidly intensifying.” 

Bitcoin price catalysts

The analyst identified other market catalysts with a number of upcoming events.

Key legislation will be reviewed in what has been dubbed “Crypto Week” in Washington D.C. 

Lawmakers are expected to debate and potentially vote on three high-profile bills: the CLARITY Act, for regulatory oversight of crypto markets; the GENIUS Act, which creates a stablecoin framework; and the Anti-CBDC Surveillance State Act.

Trump’s Digital Asset Task Force will also release a crypto policy report, potentially including a Strategic Bitcoin Reserve proposal on July 22.

There is also a Federal Reserve meeting on July 30 where rate cuts are expected. However, CME futures markets still predict a 93% probability that rates will remain unchanged. 

10x Research has targeted $140,000 to $160,000 BTC for 2025. Source: 10x Research 

Analysts react to Bitcoin’s new all-time high

“As the US gears up for Crypto Week to discuss key legislation, crypto remains resilient despite stock market volatility from geopolitical tensions and tariff concerns,” Eugene Cheung, chief commercial officer of crypto platform OSL, told Cointelegraph.

He predicts that the asset has the potential to reach $130,000 to $150,000 by year-end.

“Bitcoin breaching $120,000 is more than a milestone, it is a marker of how deeply embedded digital assets have become in institutional portfolios,” added Rachael Lucas, an analyst at Australian crypto exchange BTC Markets.

Meanwhile, LVRG research director Nick Ruck told Cointelegraph that “We expect altcoins to continue following Bitcoin's trend as traders diversify their portfolios and take on more risk.”