The expansion of US debt may bring new upward opportunities for Bitcoin and gold

The background behind the attention on Bitcoin and gold is the worsening of the US fiscal crisis. The US national debt has reached $38.5 trillion, entering a historic level, and demand for inflation hedge assets is increasing among investors.

Record Debt Levels Indicating Economic Distortion

The debt amount significantly exceeds the US GDP (about $30 trillion), indicating an abnormal debt-to-GDP ratio exceeding 120%. The rise in this ratio is a result of excessive fiscal spending since the pandemic and structural policy challenges.

Looking at the composition of the debt, domestic lenders hold over 70%, while the remaining debt is held by countries such as Japan, China, and the UK. The presence of foreign creditors poses potential risks to the international status of the US dollar.

Policy Pressure and Currency Depreciation Scenario

Facing rising debt repayment costs, governments often tend to pressure central banks to lower interest rates. In such policy environments, concerns about increasing money supply and accelerating inflation arise.

In scenarios where the risk of currency value decline materializes, assets with limited supply such as Bitcoin and gold tend to be naturally bought. These serve as traditional inflation hedges and act as insurance against the loss of fiat currency value.

Possibility of Bitcoin Following Gold’s Upward Trajectory

Market analysts suggest that Bitcoin may move in tandem with gold. Both assets are susceptible to benefits from concerns over currency devaluation, and as the US debt crisis deepens, demand for these assets is expected to increase further.

In conclusion, while the US debt expansion may cause short-term market instability, scenarios are emerging where Bitcoin and gold could experience upward pressure driven by long-term needs for value preservation.