The United States Congressional Budget Office has issued a warning about the growing national debt, while discussions among industry experts focus on Bitcoin’s potential as a hedge against the decline of the US Dollar.
The US government has expressed concerns about the impact of the nation’s increasing debt on the stability of the dollar, particularly in light of ongoing de-dollarization efforts led by the BRICS alliance. This has raised questions about whether investors may turn to Bitcoin (BTC) as a safe haven to protect against the collapse of the dollar.
The recently released long-term budget outlook from the Congressional Budget Office (CBO) highlights that if spending continues at its current rate, the budget deficit will significantly increase relative to the Gross Domestic Product (GDP) over the next three decades. The CBO also warns that failing to take action could heighten the risk of a fiscal crisis and endanger the dollar.
According to the report, the US federal debt reached $26.2 trillion, equivalent to 97% of GDP, by the end of 2023. The CBO projects that this ratio will continue to rise, surpassing the previous record of 116% set during World War II by 2029. Based on current projections, the ratio could reach as high as 166% by 2054.
CBO director Phillip Swagel, in an interview with the Financial Times, expressed concerns about the government’s handling of the debt issue. He drew parallels with the economic situation in the UK in 2022, when Prime Minister Liz Truss proposed economic changes that led to the devaluation of the British pound against the dollar. Swagel suggests that the US government could face a similar collapse if it ignores the debt problem, with potentially worse consequences for the world’s reserve currency.
In light of these concerns, the potential of Bitcoin to serve as a hedge against the decline of the dollar adds another dimension to the discussion. Prominent figures, including 2024 US Presidential Candidate Robert F. Kennedy Jr, have championed Bitcoin as an ideal tool to combat inflation.
Kennedy argues that Bitcoin is the best hedge against inflation because it removes control from the government and the monopolistic banking system, which he believes exploits money printing to benefit billionaires at the expense of ordinary Americans.
At the time of writing, Bitcoin is experiencing a 2% decrease in value over the past 24 hours and is trading at $69,960. Its market capitalization stands at $1.3 billion, with a 24-hour trading volume of $31 billion.
While there are indications that Bitcoin could be a useful tool for investors looking to hedge against the US dollar, its long-term effectiveness in this role is still a topic of debate.
Recommended for you:
– Buy Bitcoin Guide
– Bitcoin Wallet Tutorial
– Check 24-hour Bitcoin Price
– More Bitcoin News
– What is Bitcoin?
