Bitcoin has stabilized after its sudden price crash this week, though “extreme fear” is threatening to cause further problems.
The bitcoin price has fallen to lows not seen since February as collapsed bitcoin exchange Mt. Gox begins moving what could be a tidal wave of bitcoin.
Now, as Federal Reserve chair Jerome Powell has warned of a “critical period,” the bitcoin price is braced for the U.S. budget deficit to increase by 27% next year, to $1.9 trillion—something that some think is likely to support the bitcoin price.
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U.S. Treasury secretary Janet Yellen has previously warned over the spiraling $34 trillion U.S. debt … [+]
“Until the government stops spending like drunken sailors … bitcoin as a core holding makes all the sense in the world to me,” Michael Novogratz, the chief executive of crypto-focused financial services company Galaxy Digital, told CNBC, adding that both former president Donald Trump and president Joe Biden “have been the two worst presidents in terms of increasing debt, in the history of our country.”
Biden has faced increasing calls for him to step aside and make room for a new Democratic Party candidate to run against former president and presumptive Republican nominee Donald Trump this week.
Biden’s odds of dropping out of this year’s White House race have suddenly soared over the last few days to 62% on crypto-based prediction platform Polymarket.
Last month, Treasury secretary Janet Yellen issued a serious warning over the spiraling $34 trillion U.S. debt pile that some think could catapult the bitcoin price to $1 million over the next 18 months.
U.S. debt interest payments are forecast to hit $870 billion this year, according to a recent analysis by the Congressional Budget Office, after soaring inflation pushed the Federal Reserve to hike interest rates at a never-before-seen clip in the aftermath of huge Covid-era spending and money-printing.
Congressional Budget Office added this month that the U.S. budget deficit is projected to increase 27% next year, to $1.9 trillion.
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The bitcoin price has dropped back from its recent all-time high of over $70,000 per bitcoin.
Earlier this year, Bank of America analysts warned the U.S. debt load is about to ramp up to add $1 trillion every 100 days—potentially fueling a bitcoin price surge.
“The U.S. national debt is rising by $1 trillion every 100 days,” Michael Hartnett, chief strategist of Bank of America, wrote in a note to clients seen by CNBC, adding it’s “little wonder ‘debt debasement’ trades closing in on all-time highs.”
Hartnett predicted the newly created spot bitcoin exchange-traded funds (ETFs) that have taken Wall Street by storm over the last month are on course for a “blowout year,” in part because of the collapse of the U.S. dollar.