With US debt rising and GDP shrinking, can Bitcoin (BTC) save the day?
Pro-cryptocurrency attorney John E. Deaton has highlighted the possibility of growing U.S. debt and shrinking GDP, a scenario that could be bullish for Bitcoin (BTC).
With the U.S. economy in clear turmoil, Deaton outlined how the Congressional Budget Office predicts the national debt will soar to $50.7 trillion over the next decade, as previously reported in a Washington Post article.
This figure would represent 122% of GDP in 2034. This is an increase of more than $2 trillion from the February estimate of $48.3 trillion and 116% of GDP. These indicators reflect a significant increase in debt and a significant decrease in GDP. Unfortunately, the pessimistic potential of this economic outlook could translate into inflation.
Likewise, the Bureau of Labor Statistics released the much-anticipated U.S. Consumer Price Index (CPI) data on June 12. The U.S. CPI remained unchanged at 0.3% in May. The market expected inflation to fall to 0.1% for the month. Despite the surge in inflation, on an annualized basis, CPI inflation fell to 3.3% in May from 3.4% in the previous month.
These data could mean that Bitcoin is about to break out. Many companies in the United States may turn to the leading digital currency to hedge against inflation. With the emergence of spot Bitcoin ETFs, some companies have found ways to enter the crypto ecosystem.
Spot Bitcoin ETFs drive BTC holdings; BlackRock, Fidelity, Grayscale, Bitwise, WisdomTree and several other asset managers launched Bitcoin ETFs nearly six months ago. These products are designed to provide Bitcoin investment channels for institutional and retail investors. Traditional institutional investors such as MicroStrategy and Susquehanna International Group (SIG) have received BTC directly and through spot Bitcoin ETFs, respectively.
MicroStrategy has a Bitcoin portfolio that has grown over time and holds the largest amount of Bitcoin relative to its size. The business intelligence and software company currently holds more than 214,400 Bitcoin units. Notably, it is still looking to acquire more Bitcoin.
In addition to these new investment vehicles that allow exposure to Bitcoin, U.S. politicians have also shown interest. Republican presidential candidate Donald Trump is accepting Bitcoin and Ethereum as campaign donations.
President Joe Biden's campaign has also adopted this form of donation. All of this could propel cryptocurrencies, especially Bitcoin, to become a global reserve asset in the long term. As Bitcoin prices enter recovery mode, the prospect is already evident.
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