U.S. Debt Projected to Surpass $38 Trillion

In its outlook for 2026, BlackRock expects U.S. federal debt to exceed $38 trillion. The report underscores that this rapid expansion of government borrowing leaves the economy vulnerable to market shocks, particularly sudden spikes in long-term bond yields driven by fiscal concerns. Warnings about U.S. Treasuries—the cornerstone of traditional finance—suggest that these instruments may no longer provide the same safety they once did.

BlackRock argues that these structural pressures on the economy will push institutions toward new strategies for managing their portfolios. Higher borrowing costs and rising policy tensions are expected to weaken the resilience of the financial system and encourage investors to explore digital assets as a hedge.

Institutional Crypto Demand Continues to Rise

Among the report’s most notable themes is the accelerating institutional shift toward cryptocurrency. BlackRock’s own Bitcoin ETF now approaches $100 billion in managed assets, signaling that crypto is steadily becoming a mainstream component of institutional portfolios.

Analysts predict that if this trend continues, Bitcoin could climb above $200,000 next year. The report frames this momentum as part of a broader transition toward tokenization, which BlackRock describes as a foundational step in the evolution of global financial markets.

Tokenization and Stablecoins Reshape Market Infrastructure

BlackRock CEO Larry Fink reiterates in the report that tokenization will define the next phase of financial innovation. The firm highlights that tokenized systems can enhance transparency, efficiency, and accessibility—especially within private credit and asset management sectors.

Stablecoins also receive significant attention. According to BlackRock executives, they are no longer niche instruments but essential connectors between traditional finance and digital liquidity, serving as a bridge in the emerging digital economy.

AI Demand Creates New Revenue Streams for Bitcoin Miners

The report further notes the rising intersection between artificial intelligence and cryptocurrency mining. With AI models requiring increasingly powerful computing infrastructure, many publicly traded mining firms are leasing excess data center capacity to AI companies. BlackRock estimates that AI-related data centers could account for up to 20 percent of total U.S. electricity consumption by 2030, hinting at a massive long-term convergence between energy, computing, and digital assets.

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What Does $37 Trillion Mean?

By mid-2025, total federal debt rose to $36.8 trillion and is expected to exceed $37 trillion soon. This amount equals about 123% of the US Gross Domestic Product (GDP), surpassing World War II era debt levels. The Congressional Budget Office (CBO) predicts this ratio will exceed 130% over the next decade if current policies continue. 

Russian Foreign Minister Sergey Lavrov stated that the US debt level is out of control. He also said the US dollar is no longer a reliable means of payment.
Lavrov commented, “COVID-19 revealed numerous flaws in the global trade and financial system. The dollar turned into a penalty tool. Trust has been shaken.” He highlighted that the number of highly indebted countries rose from 22 in 2011 to 59 today.  These remarks reveal that the growing US debt burden causes concerns not only locally but also for global financial stability. 

Key Risks and Economic Impacts 

• Rising Interest Payments: As interest rates rise, the government will pay over $1 trillion annually in interest. This amount is close to, or even surpasses, the defense budget, potentially overshadowing health, infrastructure, and education spending. 
• Slowing Economic Growth: Economists warn that shifting investments from private to government debt may harm productivity and wage growth. Studies suggest rising debt could reduce GDP by over 1% by 2035, leading to millions of job losses. 
• Inflation and Fiscal Imbalance: Large budget deficits may force central banks to keep interest rates low, complicating inflation control and weakening monetary policy effectiveness. 
• Credit Rating and Investor Confidence: Moody’s downgraded the US credit outlook in 2024. This could raise borrowing costs and cause investors to lose confidence. Higher Treasury yields may increase volatility in both domestic and global markets. 

Pressure on the US Dollar

Increasing debt and deficits erode confidence in the dollar. While still the global reserve currency, fiscal indiscipline pushes investors away, creating downward pressure on the dollar’s value. 

Billionaire investor Ray Dalio warns that Treasury supply will outpace demand, driving inflation up and the dollar down. Fiscal experts say uncontrolled spending could add $6 trillion to debt and increase interest costs over the next decade. Institutions like the Cato Institute and Peter G. Peterson Foundation call for bipartisan reforms. 

Still, the US retains important advantages. The dollar’s global reserve status maintains strong demand. Most debt is held domestically by government funds and American investors, reducing foreign sales risk. In global crises, investors view US Treasuries as a safe haven. Despite high debt, borrowing costs remain relatively low. 

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US Treasury Chief: Urges Congress to Raise Ceiling

In an interview with CBS News, he said: 

“The United States will never default. That will never happen; we are on the warning line and will not hit the wall.” 

Bessent’s remarks came as Congress approaches the mid-July deadline to raise the debt ceiling. Current estimates indicate that the government’s borrowing authority will be exhausted by that date. Bessent warned that if the debt ceiling is not raised before then, the government may lose its ability to make debt payments. Budget analysts predict the Treasury will exhaust its extraordinary measures to make debt payments by the end of summer. 

Bessent also pushed back against JPMorgan CEO Jamie Dimon’s warnings of a collapse in the U.S. bond market. Dimon criticized government spending post-pandemic and quantitative easing policies. He suggested that rising debt levels could increase the risk of a future crisis. However, Bessent noted that Dimon’s past predictions have not come true: 

“I’ve known Jamie for a long time, and throughout his career, he has made such predictions. Fortunately, none have been accurate,” he said. 

Bessent said that reducing the debt level will be a gradual process over four years. Additionally, former President Trump used his proposed tax and spending package as a tool to raise the debt ceiling. This package could further increase the debt level. 

These concerns led Moody’s Ratings to downgrade the US credit rating from the highest level, Aaa, to Aa1. Moody’s became the third major credit rating agency to downgrade the U.S. government’s credit rating since 2011. 

US Treasury Secretary Scott Bessent emphasizes that the country will not default despite its debt load. He called on Congress to raise the debt ceiling. However, concerns about debt sustainability and economic stability remain. 

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Billionaire and Cost Plus Drugs co-founder Mark Cuban floated the idea of creating a memecoin to fund payments on the US national debt.

On January 21, Cuban said that if memecoins were “the way,” he might issue a token similar to US President Donald Trump’s official memecoin. He stated that the token would have the same terms and release schedule as Trump‘s but would direct all revenue toward paying down the US national debt.

Related tweet:

Cuban said the wallet address would be publicly shared for everyone to track. He also mentioned that those who enjoy gambling on meme-based tokens could contribute to paying off the US debt.

“If you want to gamble, gamble. But at least use it to make a dent in the US Debt,” he wrote.

Memecoins and the US Government

Although the US government has taken an anti-crypto stance in recent years, the newly inaugurated president has shown interest in the crypto world. In addition to official NFT projects, Trump has also entered the memecoin space.

On January 18, just days before his inauguration, Trump launched the official memecoin token Official Trump (TRUMP). The token reached a market capitalization of $14.5 billion a day after its launch. However, according to CoinGecko, it has since dropped by nearly 50% and is now trading around $38.56.

Similarly, First Lady Melania Trump also entered the memecoin market with her Official Melania (MELANIA) token. The token reached a market capitalization of $6 billion during its debut, but according to CoinGecko, it has since fallen to about $680 million.

Can Cuban’s Potential Memecoin Make a Dent in the US Debt?

According to the US Treasury Department, the country’s national debt accumulated throughout its history is almost $36 trillion.

US National Debt As of September 2024

Cuban‘s remark may not be a serious proposal, but it highlights the scale of the US debt challenge.

Even if Cuban’s potential memecoin performed as well as Trump’s token and retained its value when used to pay down the debt, the impact would be minimal. At best, it would reduce only 0.03% of the total national debt.

Additionally, since token values typically decrease when sold, the actual contribution to the debt would likely be even smaller.

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