US debt crisis increases demand for bitcoin

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Key facts:
  • What no one wants to hear is that we have to cut public spending, Novogratz insisted.

  • With debt on the rise “it’s easy to convince people to use bitcoin.”

The debt crisis that the United States is experiencing is one of the reasons that is driving people to invest in bitcoin (BTC). This is expressed by the CEO of Galaxy Digital, Mike Novogratz, for whom the country is heading towards a fatal spiral.

In a message posted on his X account, Novogratz made mention to the problems generated by a debt which already exceeds USD 34 billion, an amount with which a historical maximum has already been broken and which makes the country the largest debtor in the international market. And, according to Novogratz, a new trillion dollars is added to the debt every 100 days.

The situation is generating great concern, not only because it reduces business investment and slows economic growth; but also because increases expectations of higher inflation rates and erosion of confidence in the dollar. That is one of the main reasons why Satoshi Nakamoto’s coin has become one of the assets that arouses the most interest.

In that sense, there are several analysts who warn about the negative repercussions of the debt crisis.

BlackRock CEO Larry Fink said last week that the situation “is more urgent than I can remember.” For his part, Ken Griffin, founder of Citadel, warned hedge fund investors that debt is a “growing concern that cannot be ignored.”

Many fear that inflation-adjusted interest costs on the US debt could rise above 2% of GDP. In fact, Fed Chairman Jerome Powell acknowledged last January that the debt the country has incurred will have long-term repercussions and affect the finances of future generations.

Faced with this gloomy outlook, Novogratz makes some proposals, among which the cutting of public spending stands out.

We need to raise taxes on some of the rich. We also need to close legal loopholes. These types of proposals have been on the table for years, however, political interests and the supremacy of the dollar internationally have discouraged their implementation.

Mike Novogratz, CEO of Galaxy Digital.

Bitcoin emerges as a profitable alternative for investors

As Novogratz explains, seeing that “the correct measures” are not applied, the Americans explore new investment alternatives.

“That is why it is so easy to convince people to buy bitcoin and other hard assets,” he insisted, citing the various options that users now have to obtain BTC and use it.

Hence, I consider that one of the main reasons for the high adoption of ETFs bitcoin is the growing public spending of the United States. “This is a demand that has grown thanks to the debt crisis,” says the executive.

The fear of the effects of debt is such that—despite its volatility—bitcoin is seen as an asset with large returns, with great possibilities of increasing in value. This, thanks to its limited emission. A characteristic that other assets do not have, including fiat money.

Novogratz’s opinion is shared by other bitcoiners, who have also been speaking out on the issue of debt and its consequences. As reported by CriptoNoticias, Jack Mallers, the CEO of Strike, predicts that, to try to resolve the debt crisis and meet its financial obligations, the US government ends up printing more dollars, causing the currency to devalue.

The results of the measures that the authorities could take cause uncertainty among investors. This is how, according to the two experts, BTC emerges as a “refuge” not only against inflation, but also against government decisions.

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