If a market shock similar to what was experienced in the UK occurs, utopian prices can be reached with Bitcoin.
The policies of the former Prime Minister of the UK, Liz Truss, led to a decrease in the country’s fiat currency, the pound, and created chaos in the market. The Director of the Congressional Budget Office (CBO) Philip Swagel said in an interview with the Financial Times that the US could face a risk similar to the UK.
Swagel stated that the US is not yet in the same position as the UK on that day, but due to high interest rates, the cost of debt payments could increase to $1 trillion in two years.
The US’s current debt is high compared to the annual national income, and it makes it difficult for the government to keep real interest rates low. Therefore, investors generally turn to safer havens to avoid potential inflation.
Among the safer havens are Bitcoin and gold, and expectations that the Fed Chair Jerome Powell will decrease interest rates also increase demand for such risky assets.
In a statement made by the founders of the cryptocurrency news site LondonCryptoClub, they said:
In a highly indebted economy, inflation-adjusted interest rates and a financial pressure system are a condition necessary to maintain stability, and the devaluation of fiat money remains as a refuge valve.
The founders also said that this situation could mean macro winds for assets like Bitcoin and gold. If this situation occurs, it is believed that the Bitcoin bull will last longer than expected and reach even more outrageous prices.
