- Firstly, people need to know when Bitcoin was introduced to the entire world over a decade ago, it was only supposed to be a revolution in the finance ecosystem.
- That revolution has hardly come to pass as of yet.
The first decade of the cryptocurrency’s tumultuous has been marked by scandals, wild price swings, and missteps. Also, after achieving a record-high price of almost $69,000 in November 2021, Bitcoin is the one that has fallen by the end of November 2022. Many investors and crypto enthusiasts have also doubled down on their optimism regarding this future.
What Exactly Happened?
People need to know that the United States is the one that reached its ceiling debt in January 2023. The ceiling is a limit Congress places on the particular loans the government can take. Later, the chief economist at Moody’s rating agency, Mark Zandi also said that the US default could destroy the existing financial system. His opinion is not universally shared as Joe Biden, the President also backs the Optimist.
It should also be noted that since the year 2022, the US spending exceeded the income that the US Treasury received from different taxes and fees. Also, the country’s debt grew significantly against the backdrop of the year 2008 financial crisis and the height of the coronavirus pandemic. Later, during these different periods, different US authorities spent very large sums on stimulus payments and the growing tension in the geopolitical arena in 2022. It dealt another blow to the entire American economy.
How Will Crytpo Be Affected By The US Default?
Bloomberg analysts always write that a US default will always provoke a flow of assets into gold, US Treasury bonds, and Bitcoin. Later, some editors decided to conduct their own survey to understand the overall effects a US default could have on Bitcoin and the crypto market. Different experts came up with the outcomes and revealed that Bitcoin will always rise despite the collapse in the entire stock market that cryptos often track. On the other hand, the stablecoin market can face a severe crisis.
The US default could always trigger an entire flow of assets into the entire crypto industry. There were also many historical examples when the issues of the traditional finance market caused an increase in investor interest in cryptocurrency. Moreover, the head of the Analytical Department of Global Markets at IC Fontvielle, Arthur Meinhard is the one who reflected on the default’s effect on the entire stablecoin market. He also said that stablecoins could eventually lose their investment appeal as most are in short-term US government bonds and cash.
Conclusion
Some experts recalled a very high volatility of Bitcoin. Also, a very important correction is ultimately possible in case of a rapid increase in the Bitcoin price. Users should not forget the connection between the crypto industry and the traditional financial market.
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.