The debt situation in the US is worsening as borrowing surges, raising concerns about financial stability.
Causes of Rising Debt
In just 48 days, US debt has increased by $1 trillion, approaching $38 trillion. This surge is linked not only to high interest rates but also to rising government expenditures that now constitute 44% of GDP. Analysts assert this is a spending crisis. According to Kobeissi Letter: 'It’s a spending crisis.' Even if rates were lowered, budget deficits would remain in the trillions.
Warnings from Debt Markets
The federal deficit in July reached $291 billion, marking the second-largest figure for that month. Debt markets are already feeling the strain, with yields on Treasury bonds exceeding 5%. Rising yields might drain liquidity, posing risks for more risky assets.
Outlook for Cryptocurrencies
The escalating debt situation presents opportunities for Bitcoin, which appears increasingly attractive amid trillion-dollar deficits. The comparison of Bitcoin to 'digital gold' strengthens with each new borrowing. Meanwhile, altcoins, stablecoins, and tokenized Treasuries may benefit as investors seek alternative assets.
Given the rising debt in the US and diminishing trust in fiat currencies, the potential outlook for cryptocurrencies, especially those with a fixed supply, may be quite positive.
