Growing panic fears could disrupt Bitcoin price as US deficit hits $1.8 trillion

The US federal government ran a $432 billion deficit in July 2026, the single largest monthly shortfall since March 2021. The fiscal-year-to-date number has now ballooned to $1.8 trillion, and Bitcoin bulls think they know exactly what comes next.

Bitcoin has been trading around $65,000 for roughly six months, consolidating after a brutal correction that erased more than $1 trillion from the cryptocurrency’s total market capitalization.

The deficit math and why it matters for Bitcoin

When the government spends far more than it collects, the gap has to be financed. Treasury issuance rises. If private buyers don’t absorb all of it, pressure builds on the Federal Reserve to step in, either directly or through mechanisms that effectively expand the money supply. That sequence, government borrows more, central bank accommodates, currency purchasing power erodes, is the core thesis behind Bitcoin as an inflation hedge.

Anthony Pompliano, one of the most vocal Bitcoin advocates in the macro investing space, has pointed to this dynamic as the foundation for long-term annual gains in Bitcoin’s price. His argument is straightforward: as long as money printing continues, hard-capped assets benefit. Bitcoin’s fixed supply of 21 million coins makes it the digital version of that trade.

Arthur Hayes, co-founder of BitMEX and a closely watched market commentator, has taken a similar line. Hayes has argued that growth in the Fed’s balance sheet will favor assets like Bitcoin and gold over cash and bonds.

Historical parallels and what to watch

The comparison being drawn most frequently is to 2020-2021, when massive fiscal stimulus and an expanding Fed balance sheet preceded Bitcoin’s run from roughly $10,000 to nearly $69,000. The conditions aren’t identical. Pandemic-era stimulus involved direct payments to consumers and businesses, creating a more immediate demand-side boost for risk assets. Today’s deficit is driven more by structural spending and debt servicing costs.

Still, the monetary mechanics rhyme. Larger deficits mean more Treasury supply. More Treasury supply means either higher interest rates, which the government can barely afford on $40 trillion in debt, or more Fed accommodation.

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