I just saw a few breaking news: Truth Social submitted a Bitcoin ETF S-1 registration statement, the dollar index plummeted, and the number of unemployment claims continued to increase. It seems that in the face of the economic headwinds brought by tariffs, the U.S. economy is still teetering on the edge of a cliff.
Recently, there have been many major news stories in the cryptocurrency industry, but they ultimately point to the intensifying U.S. debt crisis and the rapid formation of a dollar credit crisis.
When Trump campaigned for the new President of the United States, addressing the U.S. debt crisis became one of his important campaign slogans. At this time, the world's richest man, Elon Musk, was also criticizing the U.S. debt for dragging down America, so they formed an important alliance. During the campaign, Musk personally spent hundreds of millions of dollars to support Trump, even at the cost of Tesla's stock price plummeting, resulting in a loss of over 100 billion dollars in his net worth.
In recent months, the Trump administration has been responsible for increasing revenue by selling U.S. green cards, imposing global tariffs, and pressuring Ukraine to sign mineral legislation, in short, doing 'everything possible' to raise money; Musk, on the other hand, established the Department of Government Efficiency (DOGE) to cut costs, reduce staff, combat corruption, and eliminate all 'unnecessary expenditures.'
However, compared to the initial loud slogans, both Trump's revenue generation and Musk's cost-cutting have achieved 'minimal' results. On May 30, Musk officially left the Department of Government Efficiency, marking a substantial failure of Musk's efforts.
Just after leaving the government, Musk frequently expressed his views on the U.S. debt issue on his personal social media, further criticizing Trump's promoted (Beautiful Act), calling it disgusting, which sparked a huge uproar in American politics and public opinion. He warned that this bill would push the already massive U.S. fiscal deficit up to $25 trillion, burdening the American people with heavy and unsustainable debt.
Coinbase CEO Brian Armstrong warned that if Congress fails to resolve the $37 trillion U.S. debt issue, Bitcoin could replace the dollar as the global reserve currency. Legislators and analysts have indicated that the increasing deficit and money printing are undermining trust in the dollar, prompting investors to start hoarding Bitcoin and gold. Experts, including six Nobel laureates in economics, have warned that this 'grand and beautiful act' supported by Trump could exacerbate inequality and debt problems.
Although the U.S. government will not default in the short term, the unsustainable debt path will increase the long-term risk of macro mismanagement, thereby enhancing investors' interest in non-sovereign value storage methods such as gold and Bitcoin.
In fact, the Trump administration has another solution for the U.S. debt: utilizing stablecoins.
Accompanied by the rapid expansion of the cryptocurrency industry and the surge of Bitcoin, stablecoins, as settlement intermediaries, have seen rapid growth since 2019, currently exceeding $250 billion, predominantly led by USDT and USDC, which control about 90% of the market share. They are backed by dollar assets such as U.S. debt, and can indeed absorb some of the demand for U.S. debt.
Recently, Circle, the parent company of USDC, is about to go public, which has pushed stablecoins into the spotlight. Guosheng Securities stated that if Circle successfully goes public, it will further promote the development of the U.S. stablecoin market, while accelerating the acceptance process of traditional financial users, especially institutional users, towards stablecoins.
On April 28, payment giant Mastercard announced that it would allow customers to make purchases using stablecoins and allow merchants to settle in stablecoins. Another payment giant, PayPal, is intensifying its development of the stablecoin PYUSD market. On May 19, the U.S. Senate passed the (GENIUS Act) for stablecoins, and on May 21, the Hong Kong Legislative Council passed the (Stablecoin Regulation Draft). Legislation around stablecoins, or rather their legalization, is on the agenda, and a silent war without gunpowder smoke between major powers has quietly begun.
Looking back at history, we can find that the U.S. dollar became a global currency initially linked to gold, with various countries' currencies pegged to the dollar, forming the Bretton Woods system. Subsequently, although the dollar decoupled from gold, it first occupied the discourse power of consumption and trade, binding itself to oil, thereby consolidating the dollar's hegemonic position. Afterward, as the world's largest consumer country, the U.S. needed to 'supply' dollars globally, requiring the use of dollars for settlement, satisfying global demand for dollars. Other countries, after earning dollars through exports, often recycle those dollars back to the U.S. to purchase U.S. debt, stocks, and other assets, forming a 'dollar cycle.'
However, as the U.S. debt crisis intensifies, the driving force behind the 'dollar cycle' is increasingly insufficient. The U.S. has been the first to see the value of stablecoins as a new tool for global expansion, making it extremely critical to which country's underlying currency stablecoins are pegged, as this will become the cornerstone of the new global digital economy map, evolving into a Bretton Woods-like system in the virtual economic world.
The Trump administration seems to want to build a new round of dollar hegemony 'anchored by Bitcoin and settled in stablecoins.'
So, everyone knows how to choose now, right!
