Heightened US Debt Figures Boost Bitcoin and Gold Adoption
Highlights
- United States debt has led to increased Bitcoin investments.
- Spot ETF approvals and the halving has improved its adoption.
- Gold soared to a record high as investors hedge against inflation.
The rise in United States debt has spurred inflow into Bitcoin (BTC) and Gold as investors look to hedge against inflation and macro factors. A new Reuters report shows concern about the country’s fiscal path leading to an increase in the price of Bitcoin.
The debt ratio coupled with interest rate payments has taken a toll on the government’s spending sometimes exceeding budgets.
“The U.S. budget deficit widened to $1.7 trillion in fiscal year 2023 and is on track to reach $2.6 trillion by 2034, according to the Congressional Budget Office. U.S. government debt held by the public, meanwhile, is on pace to reach a record 106% of gross domestic product (GDP) in 2028, up from 97% in fiscal year 2023. It has soared to $27 trillion from $17 trillion in early 2020 and $5 trillion in 2007.”
A Case For Bitcoin and Gold
Brad Bechtel, Jefferies Head of FX stated that the debt cycle and devaluation of money drive certain narratives. This pushed financial players to increase their exposure to Bitcoin and gold.
While the Gold-Bitcoin debate has been on for many years, recent macroeconomic events have heightened the inflow to the crypto asset and precious metal.
Lawrence White, a professor of Economics at George Mason University noted that interest from users in both assets is due to unsteady inflation in the last two years. Debt and inflation are not the only factors driving Bitcoin price in recent times.
Spot ETFs and Halving Boost Adoption
Bechtel added that the approval of spot Bitcoin ETFs by the Securities and Exchange Commission (SEC) increased interest in the asset. Inflows surged to Bitcoin taking the price above $73,000 on the back of the new investment window.
Also, the anticipation of Bitcoin halving has rallied more interest as it is seen as a bullish phase of the assets. Bitcoin traders are hopeful for rate cuts with cooling inflation and continue to increase positions to the market leader.
Meanwhile, interest in gold is also due to macroeconomic factors with foreign central banks looking to diversify reserves. Gold surged to a record $2,431 per ounce as many investors looked away from fiat.
Also Read: Bitcoin Price Rally to $100k after BTC Halving, Said Bitwise CEO And More
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