According to TechFlow, Coindesk reported that the Bank for International Settlements (BIS) warned in its annual report that highly indebted countries face the risk of a sharp drop in market confidence and urged central banks not to relax monetary policy too early. BIS pointed out that market confidence could collapse quickly if economic momentum weakens and emergency public spending is needed. Although BIS did not name specific countries, its warning came on the eve of general elections in many countries, and governments usually increase spending to win voter support.
Some cryptocurrency experts believe that Bitcoin and gold are already pricing in fiscal crises in the United States and other developed countries. This year, Bitcoin and gold have risen 48% and 13%, respectively, mainly due to increased demand for safe-haven assets. Although Bitcoin is seen as a hedge against fiat currency problems, it tends to fall along with other risky assets during times of stress. As public debt as a percentage of GDP has soared globally since 2020, the market generally expects that the Federal Reserve and other central banks will be forced to cut interest rates, driving investors to flow more into alternative assets such as Bitcoin.