After a few tumultuous weeks, the price of Bitcoin is back at the $70,000 level.
In the background, however, more and more negative stories are beginning to emerge about the fiscal health of the US government. The national debt is now 124% compared to the Gross Domestic Product (GDP) and has increased by 20% from 2020.
But why is this dangerous for America and good for Bitcoin?
π Dutch exchange celebrates upcoming bull market: β¬20 free crypto for everyone
Why is that enormous national debt dangerous for America?
Why is that enormous national debt so dangerous for America? The risk lies in the interest they have to pay on the loan.
Now they pay over $1 trillion in interest annually on ~$34.5 trillion in debt. This increases the budget deficit, which then requires them to service the debt, and eventually interest costs rise again.
Slowly but surely, America is entering a negative debt spiral.
“Since 1800, there have been 52 countries with a debt-to-income ratio of more than 130%, and 51 of them are now bankrupt,” says The COPC Letter on Fox Business.
At this rate, America's debt-to-income ratio will exceed 130% in 2033, and that ratio will rise to 150% or more in 2050, according to the US CBO.
How Out of Control Is US Government Spending?
“Since 1800, 52 countries have seen debt exceed 130% of GDP, 51 of which have defaulted.” β @TKL_Adam with @cvpayne
Currently, the US has a debt-to-GDP ratio of 124%, a 20% increase from 2020.
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β Kobeissi Letter (@KobeissiLetter) March 26, 2024
Why is this bullish for Bitcoin?
How can America recover from this situation? The answer to the question does not seem to exist at present. America seems to have no way to solve this problem anymore, which means it is slowly but surely heading towards bankruptcy.
Even if America does not immediately go bankrupt, the situation will inevitably lead to significant inflation.
This means more investors are looking for alternatives to the US dollar, which still serves as an important reserve asset. Those alternatives will seek investors in assets that governments cannot print.
You should think about gold, stocks, real estate and bitcoin. Especially now that Bitcoin is doing so well, the digital currency is increasingly presenting itself as an attractive alternative in the search for greater scarcity and security.
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