Bitcoin
The bitcoin price has rocketed to $36,000 per bitcoin this year, doubling over the last 12 months and helping ethereum, XRP and the wider market to soar after the world’s largest asset manager BlackRock unleashed “nuclear winter.”
Now, as fears spread the U.S. could be about to “kill” bitcoin, legendary billionaire investor Ray Dalio has warned the swelling U.S. debt pile of $33.7 trillion is about to reach an “inflection point”—something that one researcher has called the “bullish case for bitcoin.”
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The bitcoin price has rocketed this year, climbing alongside ethereum and XRP, even as the U.S. … [+] Federal Reserve and the Treasury wrestle with the swelling $33 trillion dollar debt pile.
“You want to keep spending at the same level, there is the need to get more and more into debt. The way that works, it accelerates,” Dalio, the founder of the world’s largest hedge fund Bridgewater Associates, told CNBC.
“We are at the point of that acceleration, which creates the supply-demand problem. It’s made worse by the other issues that we’re talking about, the internal political issue, the internal social conflict issue.”
In September, U.S. national debt—the amount of money borrowed by the federal government to cover operating expenses—topped $33 trillion for the first time, according to figures from the U.S. department of the Treasury, with spending turbo-charged by the Covid crisis and lockdowns that paralised the economy in recent years.
“Ray Dalio laying out the bullish case for bitcoin,” bitcoin analyst and founder of Reflexivity Research, Will Clemente, posted to X (Twitter).
In 2022, the U.S. notched a $1.7 trillion deficit, with $659 billion spent on net interest costs in fiscal 2023 to finance the debt.
“The government is going to have to continually and increasingly issue more debt to fund their previous debt payments, similar to an individual taking out a new credit card to pay off old credit card debt,” Clemente said. “Monetary debasement is mathematically programmed.”
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The bitcoin price has surged this year, making up much of the ground it lost in its 2022 crash that … [+] wiped $2 trillion from the combined ethereum, XRP and crypto market.
Meanwhile, the Federal Reserve has embarked on a frantic series of interest rate hikes as it wrestles to get run-away inflation under control, hiking rates at their fastest-ever clip to levels not seen since before the 2008 global financial crisis.
As a result, the federal government is paying more just for the interest on the national debt with projections showing those interest costs tripling from just under $400 billion last year to almost $1.2 trillion in 2032, forcing borrowing higher again to cover the higher interest expenses.
Some—including Tesla billionaire Elon Musk—have warned the soaring U.S. debt pile could push the Fed into a “debt death spiral,” creating a vicious circle that it may not be able to escape.
Last month, analysts with Wall Street invesment bank Jefferies warned the Fed will soon be forced to restart its money printer—potentially collapsing the U.S. dollar and fueling a bitcoin price boom to rival gold.
