‘Flashing Red Warning’—$33 Trillion U.S. ‘Debt Death Spiral’ Could Suddenly Trigger A Bitcoin Price ‘Vicious Circle’
Bitcoin and other cryptocurrencies have faced significant challenges this year, largely due to pressure from the Federal Reserve and concerns about the growing U.S. debt. However, some experts are predicting that the worst may still be to come. To navigate the potential rollercoaster ride of the crypto market ahead of next year’s historical bitcoin halving, Forbes is offering its CryptoAsset & Blockchain Advisor subscription.
The bitcoin price experienced a sharp decline from its peak of nearly $70,000 per bitcoin in late 2021. Nevertheless, there are rumors that one of the world’s biggest technology companies may be planning to enter the world of bitcoin and crypto, suggesting that the market may see some surprises in the future.
Concerns about the U.S. debt pile, which has reached a staggering $33 trillion, have raised fears of a “debt death spiral.” This phenomenon creates a vicious circle that the Federal Reserve may struggle to escape. However, it could also potentially boost the value of bitcoin. U.S. senator Cynthia Lummis, who is a bitcoin supporter, has warned that the increasing deficit, which doubled to $2 trillion in the last year, should be a warning sign of a looming crisis.
The Federal Reserve has been implementing a series of interest rate hikes in an attempt to control runaway inflation. However, this move might have unintended consequences, as raising rates could actually stoke higher inflation, exacerbating the debt crisis. Max Keiser, a proponent of bitcoin, believes that this will lead to a “death debt spiral” and expects that bitcoin will outperform other assets under these circumstances.
Jamie Dimon, the CEO of JPMorgan, has urged people to prepare for a “worst-case” scenario in which interest rates reach 7%. This warning comes after Fed chair Jerome Powell expressed his willingness to continue raising rates if necessary to address inflation.
Arthur Hayes, the former CEO of crypto exchange BitMex and a prominent bitcoin trader, predicts that the bitcoin price could surge if the Fed persistently raises rates. He argues that as the government increases interest payments to the wealthy, they will spend more, leading to an increase in GDP. Bondholders may then seek higher returns by investing in riskier assets such as bitcoin.
In conclusion, the future of bitcoin and cryptocurrencies remains uncertain, with factors such as the Federal Reserve’s monetary policies and the U.S. debt crisis playing significant roles. Subscribing to Forbes’ CryptoAsset & Blockchain Advisor may provide valuable insights and help investors navigate the potential ups and downs of the market ahead of the bitcoin halving next year.
