Bitcoin Outlook Upgraded Despite Rate Hike Fears and Rising Debt

Tiger Securities has upgraded its outlook on Bitcoin despite concerns about potential Federal Reserve rate hikes. The firm maintains a buy rating, but warns that near-term headwinds from rate increases could weigh on the cryptocurrency.

According to Tiger Securities, two or three 25 basis point rate increases could lift real yields and tighten liquidity, which would have a negative impact on Bitcoin. However, if stronger productivity supports risk appetite and tightening ends without a recession, the effect would be more manageable.

The firm noted that public debt stands near 100% of GDP, with Congressional Budget Office projections showing fiscal year 2026 net interest spending at 3.3% of GDP, absorbing roughly 19% of federal revenues. Even under an optimistic artificial intelligence scenario, debt would continue rising, with real growth of 2.75% and GDP-price inflation of 2% implying nominal growth near 4.8%. With effective borrowing costs of 3.8% to 4.0% and a primary deficit of 2% to 3%, debt-to-GDP would still rise by roughly one to two percentage points annually.

Tiger Securities emphasized that the principal near-term risk for Bitcoin is tightening that proves larger or more persistent than markets expect. The firm added that persistent primary deficits would sustain pressure to contain financing costs, keeping financial repression relevant to Bitcoin's monetary premium.