Bitcoin’s rise could challenge dollar dominance amid US debt

BlackRock CEO Larry Fink has warned that Bitcoin (CRYPTO:BTC) could erode the U.S. dollar’s global dominance if America fails to address its mounting debt crisis.

In his annual letter to investors, Fink noted that decentralised finance innovations like Bitcoin make markets “faster, cheaper, and more transparent,” but cautioned that investors might increasingly view Bitcoin as a safer alternative to the dollar amid fiscal instability.

The U.S. national debt reached $36.2 trillion as of March 2025, growing by $1.8 trillion over the past year alone.

With debt now exceeding 122% of GDP, Moody’s has maintained the country’s AAA credit rating but downgraded its outlook to negative.

The Bipartisan Policy Center warns of a potential default as early as July 2025 if debt ceiling negotiations stall.

Fink’s comments reflect broader concerns that Bitcoin could gain traction as a hedge against inflation and currency devaluation.

While some analysts predict Bitcoin’s price could surge if the U.S. defaults, others argue stablecoins might paradoxically reinforce the dollar’s dominance.

Tokenisation, another key focus of Fink’s letter, is seen as a democratising force in finance.

By enabling instant transactions and eliminating settlement delays, tokenisation could unlock billions in immobilised capital.

BlackRock’s BUIDL fund, the largest tokenised real-world asset (RWA) fund, exemplifies this trend, with the broader RWA market valued at $19.6 billion and projected to reach $4–30 trillion by 2030.

“It will revolutionise investing. Markets wouldn’t need to close. Transactions that currently take days would clear in seconds,” emphasised Fink, noting that tokenisation’s impact extends beyond efficiency.

However, critics note that centralisation risks persist in tokenised ecosystems, particularly in voting rights and yield distribution.

As the U.S. grapples with fiscal challenges, Bitcoin’s role as a reserve asset remains contentious.

At the time of reporting, the Bitcoin (BTC) price was $82,635.07.