Rising US Debt and Shrinking GDP, Can Bitcoin (BTC) Save The Day?

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As an analyst with a background in economics and finance, I find John E. Deaton’s analysis of the potential impact of the US debt and shrinking GDP on Bitcoin intriguing. The escalating national debt and decreasing GDP percentage are indeed worrying signs that could potentially lead to inflation. In such economic conditions, it is not surprising that investors and companies may turn to Bitcoin as a hedge against inflation.

Lawyer John E. Deaton, who is pro-crypto, has pointed out that the increasing debt and decreasing Gross Domestic Product (GDP) in the US might create favorable conditions for Bitcoin.

US Economy In Visible Turmoil 

In a previous article published by The Washington Post, Deaton explained that, according to the Congressional Budget Office’s projections, the national debt is expected to reach an astounding $50.7 trillion over the next decade.

In about a decade, according to the Congressional Budget Office’s projections reported by The Washington Post, the national debt is expected to reach an astounding $50.7 trillion, which corresponds to 122% of the country’s Gross Domestic Product (GDP). This represents a significant increase from their earlier estimate in February 2023, which projected a debt of $48.3 trillion or 116% of the GDP.

Career…

— John E Deaton (@JohnEDeaton1) June 19, 2024

By 2034, this figure is projected to represent a 122% contribution to the GDP that would have been achieved. This figure has increased by approximately $2 trillion from the previous estimation of $48.3 trillion and equates to 116% of the GDP. The data indicates a substantial growth in debt and a considerable decline in economic output. Regrettably, such an economic projection carries the risk of inflationary pressures.

The U.S. Bureau of Labor Statistics revealed that the highly anticipated Consumer Price Index (CPI) for the United States remained at a 0.3% increase in May, as reported on June 12. However, the market had predicted a slower inflation rate of 0.1% for the month. Nevertheless, the annual inflation rate saw a decrease from 3.4% in April to 3.3% in May.

There is a strong possibility that Bitcoin could experience a significant advancement, as indicated by the current data. Several American companies are considering adopting Bitcoin as a protective measure against inflation. A few businesses have even entered the cryptocurrency market, taking advantage of the introduction of spot Bitcoin Exchange-Traded Funds (ETFs).

BTC Position Propelled By Spot Bitcoin ETFs 

Approximately six months ago, a number of asset management companies including BlackRock, Fidelity, Grayscale, Bitwise, and WisdomTree introduced Bitcoin ETFs (Exchange-Traded Funds) to the market. These financial vehicles were specifically created to provide institutional investors and individual traders with an easier way to invest in Bitcoin.

Institutions such as MicroStrategy and Susquehanna International Group (SIG) are two examples of traditional investors who have adopted Bitcoin in different ways. While MicroStrategy has chosen to invest directly in the cryptocurrency, Susquehanna International Group has opted for investment through spot Bitcoin Exchange-Traded Funds (ETFs).

MicroStrategy’s Bitcoin holdings have expanded significantly, making it the largest known holder of Bitcoin in relation to its company size. Currently, this business intelligence and software firm possesses over 214,400 units of Bitcoin, with plans to potentially purchase even more.

As a crypto investor, I’m always on the lookout for new ways to gain exposure to digital assets like Bitcoin and Ethereum. And it seems that I’m not alone in this pursuit. American politics have lately become more open to these cryptocurrencies. For instance, during the 2016 presidential campaign, Republican candidate Donald Trump chose to accept donations in both Bitcoin and Ethereum for his election efforts.

As a financial analyst, I’ve observed an intriguing development: the Biden administration’s campaign team has joined the growing trend of accepting cryptocurrency donations. This move, among other factors, could significantly boost the status of digital currencies, particularly Bitcoin, towards becoming global reserve assets in the future. The preliminary signs of this shift are already evident, as Bitcoin’s price has started recovering and currently stands at $64,952.37 – a 0.77% increase within the last 24 hours.

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2024-06-20 01:30