U.S. Debt Growth Will Drive Crypto's Gains, BlackRock Says in Report on AI

Blackrock, the world's largest asset manager, laid out its vision for 2026 and — reading past its bearish outlook for U.S. bonds and the world's largest economy — it’s a bullish blueprint for institutional crypto adoption.

U.S. federal debt will swell past $38 trillion, setting the tone for a market outlook defined by fragility and the failure of traditional hedges, according to the report. For crypto that's good news, because this economic environment will lead to accelerated digital asset adoption among the Wall Street behemoths.

More government borrowing "... creates vulnerabilities to shocks such as bond yield spikes tied to fiscal concerns or policy tensions between managing inflation and debt servicing costs," the report said.

The warning on long-term U.S. Treasuries, the traditional backbone of finance, is a signal AI-driven leverage and government debt is likely to make the financial system more fragile, and may compel institutions to turn to alternative assets like bitcoin BTC$88,161.78 as a hedge against fiscal failure.

The institutional flood of money into crypto, exemplified by the BlackRock’s $100 billion in bitcoin ETF allocations, its top revenue source, promises to take digital assets to all-time highs next year, with some analysts forecasting the largest cryptocurrency will climb to more than $200,000.

This is all part of a "modest but meaningful step toward a tokenized financial system," which provides the decentralized infrastructure to handle the private credit and asset management institutions seek. CEO Larry Fink described tokenization as the next generation of financial markets. The world’s largest asset manager’s report says it clearly: where government debt fails, the digital economy begins.

​​As for stablecoins, digital assets whose value is pegged to a real-world asset like the dollar or gold, they "are no longer niche, they're becoming the bridge between traditional finance and digital liquidity," said Samara Cohen, Blackrock's global head of market development.

The surge in computing power to drive AI is already benefiting bitcoin miners, who are able to parlay their energy deals into new uses as surging demand for high-performance computing drives up the value of their infrastructure. The AI buildout is constrained not by chips, but by power, accordion the report. In fact, AI data centers could demand up to 20% of current U.S. electricity by 2030.

Several publicly traded mining firms reported increased revenue this year not just from mining, but from leasing out data center capacity to AI companies in need of power-hungry GPUs.