Crypto markets have always functioned well when people have less confidence in government securities. With a piling US debt, the crypto world is again gearing up for rising investor confidence. Forbes notes that the chief executive of BlackRock, Larry Fink, has expressed concern about the rate at which the U.S. debt mountain is increasing.
Fink’s cryptocurrency conversion last year catalyzed the successful drive to introduce Bitcoin spot exchange-traded funds (ETFs) to Wall Street. Fink said to CNBC,
US debt concerns keep market participants pressured
Forbes also highlights that U.S. Treasury Secretary Janet Yellen has warned that nations worldwide are gradually migrating away from the dollar as bitcoin and other cryptocurrencies gradually erode dollar dominance, as the country’s soaring $34 trillion debt load sparks fears of collapse.
Over the past year, the price of bitcoin has surged despite a “critical” warning from the Federal Reserve. This increase has been aided by gamblers who are more optimistic that former US President Donald Trump will win back the White House in November.
Rising US debt raises debasement concerns
Another issue with rising US debt is investors’ worry about a possible debasement. The term “currency debasement” describes the process by which a currency loses value, especially for fiat currencies, which are not supported by tangible assets like gold or silver.
Regretfully, because the United States and other countries have permitted ongoing, significant deficits, which have left them with total debt loads approaching or surpassing 100% of their gross domestic product, the long-term rate of the dollar’s depreciation will probably worsen.
Debtors—including governments—have entered a financial death spiral wherein they are borrowing money just to pay interest.
What is the crypto market’s expected growth?
If the debasement concerns persist, people will likely want to keep their money out of government reach. In such a situation, unbacked markets like crypto, especially Bitcoin, are likely to thrive.
The size of the worldwide cryptocurrency industry was estimated at $4.67 billion in 2022, and from 2023 to 2030, it is projected to increase at a compound annual growth rate (CAGR) of 12.5%. Moreover, according to Coinmarketcap data, the total value of the cryptocurrency market is currently above $2.4 trillion.
Notably, many experts are predicting that Bitcoin will hit as high as $150,000 in this current bull cycle. If that happens, the global crypto market cap could be worth above $5 trillion in 2025, as other altcoins surge in response to Bitcoin’s rally.
Furthermore, the growth of the cryptocurrency market will be bolstered by the increasing implementation of blockchain technology, a decentralized ledger utilized by digital currencies to authenticate transactions.
Over the anticipated timeframe, the increased adoption of decentralized ledger technology is forecasted to drive the expansion of the cryptocurrency market. Additionally, the expectation of increased usage of cryptocurrencies for international money transfers due to reduced fees for consumers and exchanges is likely to stimulate industry growth.
