If a market shock similar to the one experienced in the UK occurs in the US, utopian prices can be reached in Bitcoin.
The policies of former British Prime Minister Liz Truss caused the country’s fiat currency pound to decline and created chaos in the market. Philip Swagel, director of the Congressional Budget Office (CBO), expressed in an interview with the Financial Times that the US could face a risk similar to that of the UK.
Swagel noted that while the US is not yet in the same position as the UK at the time, the cost of debt payments could reach $1 trillion within two years due to high interest rates.
With the current debt of the US being high relative to annual GDP, it is difficult for the government to keep real interest rates low. Therefore, investors generally turn to safer havens to avoid potential inflation.
Among the safe havens are Bitcoin and gold, and expectations of Federal Reserve (FED) Chairman Jerome Powell lowering interest rates are increasing demand for such risky assets.
In a statement by the founders of the cryptocurrency news site LondonCryptoClub, the following statements were made:
“In a highly indebted economy, inflation-adjusted interest rates and the financial pressure system are a condition necessary to sustain, and the devaluation of fiat money remains as a refuge valve.”
The founders also stated that this situation could mean macro winds for risk assets such as Bitcoin and gold. If this situation occurs, it is thought that the Bitcoin bull will last longer than expected and reach even more exaggerated prices.
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