Tesla billionaire Elon Musk, who has been waging a campaign against spiraling U.S. debt, has again warned of looming U.S. bankruptcy as a Federal Reserve “nightmare” could be coming true.

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The bitcoin price has surged following the election of incoming U.S. president Donald Trump, climbing after he confirmed plans to create a bitcoin strategic reserve—something proposed as a way to combat soaring debt and sticky inflation.

Now, as Trump has been pitched a “capital markets renaissance fueled” by bitcoin to “unlock trillions in wealth,” Musk has warned “de facto” bankruptcy will happen in the U.S. without a “fix.”

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“We either fix this or go de facto bankrupt,” Musk posted to X, quoting a post from the prediction market Kalshi’s account that warned the U.S. “has a severe spending problem [with] current national debt is now at $36 trillion and growing” and proposing a “potential solution” in the form of Musk’s Doge department of government efficiency—named for the bitcoin-inspired meme-based dogecoin.

The U.S. debt has soared over recent years, topping $34 trillion at the beginning of 2024, with Covid and lockdown stimulus measures contributing to massive government spending and helping to send inflation spiraling out of control in 2022.

Inflation of over 10% forced the Federal Reserve to hike interest rates at a historical clip, pushing up debt interest payments and fueling fears of a “death spiral.”

Musk’s campaign against excessive U.S. spending has resulted in the creation of the Doge Department Of Government Efficiency, which Musk has said he believes could strip $2 trillion from U.S. spending.

The Doge department is a nod to the shiba inu doge meme that’s also linked to the dogecoin cryptocurrency, named by Elon Musk as his “favorite” cryptocurrency and accepted as payment by his Tesla car company—though Tesla continues to hold around 10,000 bitcoin worth around $800 million on its balance sheet.

Earlier this year, Trump floated the idea he could use bitcoin to “pay off our $35 trillion—hand them a little crypto check, right? We’ll hand them a little bitcoin and wipe out our $35 trillion,” he said.

In July, Trump promised to create a “strategic national bitcoin reserve” and predicted bitcoin could eclipse gold’s $16 trillion market capitalization during an appearance at the Bitcoin 2024 conference.

Earlier this month, Trump confirmed he plans to create a U.S. bitcoin reserve.

“We’re gonna do something great with crypto because we don’t want China, or anybody else … but others are embracing it, and we want to be ahead,” Trump told CNBC. “Yes, I think so,” Trump said in response to a question about whether the U.S. will create a bitcoin strategic reserve similar to its oil reserve.

Republican senator Cynthia Lummis introduced a bill to congress earlier this year, entitled the Boosting Innovation, Technology and Competitiveness Through Optimized Investment Nationwide (BITCOIN) Act, which proposes the U.S. buy 1 million bitcoins over five years to reduce the spiraling $35 trillion U.S. national debt.

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“As we head into 2025, it will be a historic year for digital assets as the U.S. adopts bitcoin as a national reserve currency,” Tim Kravchunovsky, founder and CEO of the decentralized telecommunications network Chirp, said via email. “Despite the ongoing uncertainty around this, I’m convinced this will happen sooner rather than later—likely within a few months of president-elect Donald Trump being inaugurated.”

Some bitcoin price and crypto market watchers have warned the bitcoin price could crash back if Trump fails to deliver on his promised bitcoin plans, however.

“The build-up of expectation around Trump has led to a price surge—however, investors will be watching closely for action in Trump’s first 100 days,” Ed Hindi, chief investment officer at Tyr Capital a Swiss-based crypto hedge fund, said via email. “If Trump’s actions do not match the rhetoric, many weak hands will fall.”