Due to growing concerns over the United States’ fiscal situation and potential inflation, some investors are shifting their funds into alternatives like Bitcoin (BTC) and gold as a form of protection. A recent Reuters article underscores this trend, suggesting that anxiety about America’s debt increase could contribute to rising Bitcoin prices.
The combination of the debt ratio and interest payments has put pressure on the government’s budget, causing overspending in certain instances.
In the financial year 2023, the US budget shortfall expanded to an astounding $1.7 trillion, as per the Congressional Budget Office’s projections, with this figure projected to balloon to a staggering $2.6 trillion by the year 2034. Additionally, the amount of US government debt held publicly is expected to hit a record-breaking 106% of the country’s Gross Domestic Product (GDP) in the year 2028, marking a significant increase from the 97% recorded in fiscal year 2023. This debt has seen a dramatic surge from $17 trillion in early 2020 to an unprecedented $27 trillion as of now, while it was only at $5 trillion back in 2007.
A Case For Bitcoin and Gold
According to Brad Bechtel, Jefferies’ FX chief, the ongoing debt cycle and weakening value of currency are sparking particular stories among financiers. As a result, they have been amplifying their investments in Bitcoin and gold.
The Gold-Bitcoin controversy has raged for quite some time, but more recently, major economic occurrences have led an increased number of investors towards cryptocurrency and gold.
Professor Lawrence White of George Mason University pointed out that the increased appeal of both debt and Bitcoin can be attributed to the unstable inflation rates experienced over the past two years. However, it’s essential to note that these aren’t the sole reasons behind Bitcoin’s recent price fluctuations.
Spot ETFs and Halving Boost Adoption
The SEC’s approval of Bitcoin spot ETFs sparked significant investor attention towards the cryptocurrency. Consequently, substantial inflows poured into Bitcoin, pushing its price beyond $73,000.
Additionally, the upcoming Bitcoin halving has stirred up excitement among investors who view this event as a potential period of growth for the cryptocurrency. Bitcoin speculators remain optimistic about possible interest rate decreases due to declining inflation and are steadily increasing their holdings in the dominant digital asset.
At the same time, gold’s allure has grown due to economic conditions beyond our control. Central banks around the world have been purchasing gold to expand their reserve options. The price of gold reached an unprecedented high of $2,431 per ounce as investors shifted their focus away from traditional currencies.
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2024-04-19 19:15