Elon Musk’s initiative to tackle U.S. government inefficiency—dubbed the "Doge Department of Government Efficiency" in a nod to the meme-inspired cryptocurrency Dogecoin—has sent ripples through Washington. The Tesla CEO and owner of X (formerly Twitter) has cautioned that the U.S. faces a risk of bankruptcy, sparking debate and speculation across financial markets.
Following Donald Trump’s re-election as U.S. president, a scenario Musk openly supported, both Bitcoin and Dogecoin have seen their prices surge. Investors are betting on the creation of a crypto-friendly administration under Trump, potentially influenced by Musk’s pro-crypto stance.
Now, Musk has hinted at a potential shake-up in the crypto market. He suggested that if his efforts to combat inflation through the Doge Department are successful, the prices of Bitcoin, Dogecoin, and other cryptocurrencies could decline.
"If dollar inflation is solved, the price in dollars to buy cryptocurrency will actually drop, other things being equal," Musk stated on X, responding to a post by Y Combinator CEO Garry Tan. "What matters is the ratio of dollars to crypto," he clarified.
Tan had shared a video of Canada’s Conservative Party leader, Pierre Poilievre, discussing strategies to reduce inflation by curbing government overspending. “My 2025 prediction was Dogecoin goes up if Elon’s Doge is successful, and this is why,” Tan added.
The U.S. national debt has surged in recent years, surpassing $34 trillion by early 2024. Covid-era stimulus measures and widespread government spending contributed to spiraling inflation, which peaked at over 10% in 2022. In response, the Federal Reserve implemented aggressive interest rate hikes, exacerbating debt costs and raising concerns of a fiscal "death spiral."
Musk’s Doge Department, part of his campaign against excessive U.S. spending, aims to cut $2 trillion from government expenditures. If successful, this initiative could have far-reaching implications, not only for the U.S. economy but also for cryptocurrency markets, potentially reshaping the global financial landscape.
