- The United States Congressional Budget Office has warned of growing national debt.
- Bitcoin’s use as a hedge against the Dollar’s decline remains hot in industry expert’s discussions.
The US government has warned about the potential of the nation’s escalating debt on the dollar’s stability following ongoing de-dollarization efforts spearheaded by the BRICS alliance. This issue has raised questions on the probability of investors using Bitcoin (BTC) as a haven to combat the dollar’s collapse.
Growing US Debt and Impending Crisis
The Congressional Budget Office (CBO) noted in its recently released long-term budget outlook that assuming spending continues constant, the budget deficit will “increase significantly in relation to Gross Domestic Product (GDP) over the next 30 years.” Furthermore, the office cautioned that inaction might “heighten the risk of a fiscal crisis,” endangering the dollar.
The report revealed that the US federal debt reached $26.2 trillion or 97% of GDP at the end of 2023. The CBO projects that the ratio will keep rising, surpassing the 116% record set during the World War by 2029. Furthermore, based on its current trajectory, they project it to reach as high as 166% by 2054.
While commenting on the issue with the Financial Times, CBO director Phillip Swagel warned of the dangers the government faces with its currency. He drew parallels to the economic standing of the UK in 2022 when then-Prime Minister Liz Truss proposed economic changes that eventually led to the British pound falling against the dollar. According to him, Truss’s government would eventually face its collapse.
Swagel and the CBO warn that ignoring the debt issue could result in a similar problem in the United States, but the ramifications for the world’s reserve currency could be substantially worse.
Could Bitcoin Offer a Hedge Against Dollar Decline?
Amid these concerns raised by both Swagel and the CBO, the potential of Bitcoin being used as a tool to fight the dollar’s decline adds another dimension to this discussion. Recently, notably personalities such as 2024 US Presidential Candidate Robert F. Kennedy Jr has championed the use of Bitcoin as a hedge against inflation.
Expanding on what was earlier reported by Crypto News Flash, Kennedy praised the asset class as an ideal vehicle for seizing control from both the government and the banking sector.
He emphasized that Bitcoin is the best inflation hedge because it removes control from the government and the monopolistic banking system, which uses money printing to transfer wealth to the oligarchy of billionaires while impoverishing ordinary Americans.
As of the time of writing, Bitcoin is down by 2% in 24 hours and is trading at $69,960, with its market capitalization and 24-hour trading volume standing at $1.3 billion and $31 billion respectively.
The cryptocurrency’s movement is showing signs that it can have a useful application for investors, in the form of hedging against the U.S. dollar. However, it’s still debatable whether that will hold up over the long term.
