Bitcoin (BTC) and leading altcoins, including Ethereum (ETH), Cardano (ADA), Hedera Hashgraph (HBAR), and Stellar (XLM), have rebounded in recent weeks. BTC is holding steady above $95,000, while the market cap of all coins has jumped to over $3 trillion.
$36.7 Trillion Catalyst for BTC, ADA, ETH, HBAR, and XLM
Bitcoin and these altcoins may benefit as BTC has now become a safe-haven asset akin to gold.
For example, Bitcoin has continued to outperform major American indices, such as the Dow Jones and Nasdaq 100, since Donald Trump announced his Liberation Day tariffs.
This means that it will likely continue to outperform stocks during future Black Swan events. Investors now view it as a digital version of gold, with better features such as a fixed supply and rising mining difficulty.
The next potential Black Swan event may stem from the soaring US public debt. Data shows that debt has jumped to over $36.7 trillion, a figure that continues to grow.
Debt is estimated to increase to between $40 trillion and $50 trillion by 2030. The risk is that traditional buyers of US debt, such as China and Japan, are no longer purchasing as much as they did previously. Indeed, China has slowly been deleveraging and now holds about $760 billion in treasuries, down from $1.32 trillion in 2013.
Therefore, with public debt soaring and no major buyers on the other side, there is a risk of a significant debt crisis.
READ MORE: Shiba Inu Price Chart Signals 145% Surge: Short Squeeze Ahead?
US Banks Have $482 Billion in Unrealized Losses
Additionally, while US banks portray an image of stability, they are all sitting on over $482 billion in unrealized losses. These losses are due to the substantial debt they purchased when interest rates were zero.
There are two leading solutions to this crisis. Firstly, the Federal Reserve may slash interest rates to zero, which is highly unlikely in a climate of rising inflation.
Secondly, banks could opt to sell their long-dated bonds, but this is unlikely due to the substantial losses they would incur, which would impact their stock prices.
Therefore, these unrealized losses, along with the Federal Reserve’s $1 trillion unrealized loss, represent a significant risk.
These risks may help boost Bitcoin price as it now becomes the collateral of last resort. Bitcoin is becoming increasingly rare, less correlated to the stock market, and is gradually solidifying its role as a safe-haven asset.
A strong Bitcoin rebound is likely to lead to higher altcoin prices due to their close correlation. This may benefit popular blue-chip coins like ETH, HBAR, ADA, and XLM.
READ MORE: XRP Price Prediction: Can Ripple Turn $10k into $1M by 2030?
