Bitcoin (BTC) broke another all-time high on the morning of March 13th. At the time of writing, BTC price has reached a new record high of $73,650.
If you ask acclaimed macroeconomist Lyn Alden, Bitcoin’s rapid rise is the result of the United States’ massive national debt.
“This is the case when national debt accounts for more than 100 percent of gross domestic product (GDP). Financial repression and currency devaluation against scarce assets. It happened in the 1940s and now we’re seeing it again.
Nothing can stop this train. therefore a very optimistic Lyn Alden.
Inflation in the USA is exploding rapidly
Yesterday it was announced that American inflation is higher than expected and hoped. The consumer price index came in at 3.2%, almost 0.1% higher than expected, but people are particularly concerned about inflation in the services sector.
Did you think inflation had gone away?
WOW. On a three-month annualized basis, supercore inflation rose a whopping 6.9% in February.
Core services inflation minus accommodations is a key metric the Fed tracks, also known as supercore inflation.
In January, this metric increased by 0.7%… pic.twitter.com/FS8Ev3ktRA
– The Kobeissi Letter (@KobeissiLetter) March 12, 2024
In January, this inflation, also known as supercore CPI, rose by 0.7% and was followed by another jump of 0.5% in February.
“The fight against inflation is far from over,” The Kobeissi Letter wrote on Twitter.
The result? It is therefore expected that the US Federal Reserve will wait longer before cutting interest rates. In theory, this is bearish for risk assets like Bitcoin and stocks, but we still see rising prices.
How is that possible? This has everything to do with the massive national debt that Lyn Alden mentioned earlier.
Will America’s Debt Help Bitcoin Surge?
The price of Bitcoin was briefly shocked by inflation and fell by several thousand dollars, but a few hours later it “simply” hit a new all-time high. What’s up?
Many analysts believe the market is beginning to realize how dangerous high interest rates are for the U.S. government. The longer the Federal Reserve waits to cut interest rates, the faster the government’s interest costs rise, causing budget deficits to rise and forcing it to take on even more debt (i.e., print dollars).
This is of course favorable for the Bitcoin price and less favorable for the US dollar. The theory is that this will lead to a “flight to scarcity” that could see people switch en masse from the US dollar to the scarcity of gold, stocks, real estate and of course Bitcoin.