Bitcoin Performs as Crisis Concerns Rise

As the U.S. dollar wavers, concerns mount over an impending 'crisis' amid startling projections from Bank of America that the U.S. debt could balloon by an additional AU$1.52 trillion (US$1 trillion) every 100 days. This alarming prediction comes during a significant boom in Bitcoin, Ethereum, XRP, and the broader crypto market, which has seen valuations soar over the past year.

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Bitcoin's price has recently breached the AU$91,560 (US$60,000) threshold, reaffirming its status as a trillion-dollar asset, while the total market capitalisation of Ethereum, XRP, and other cryptocurrencies has crossed AU$3.05 trillion (US$2 trillion). This staggering growth has prompted stark warnings about potential widespread economic repercussions.

Bank of America strategists have highlighted the rapid increase of the U.S. national debt, which is on track to surge by AU$1.52 trillion (US$1 trillion) every three months. According to Michael Hartnett, the chief strategist at Bank of America, this pace is hardly surprising given the record highs approaching for traditional 'debt debasement' assets like gold, at AU$3,165 (US$2,077)/oz, and Bitcoin, at AU$103,390 (US$67,734).

Hartnett forecasts a standout year for the newly launched spot Bitcoin ETFs that have captivated Wall Street over the past month, partly driven by the declining U.S. dollar. BlackRock's IBIT and Fidelity's FBTC have seen impressive growth since their January debut, with IBIT surpassing AU$15.23 billion (US$10 billion) and FBTC accumulating AU$9.14 billion (US$6 billion) in assets under management, contributing to Bitcoin's recent price surge—heralded as Bitcoin's "IPO moment."

The rapid inflow into these Bitcoin ETFs has kindled predictions that Bitcoin could challenge gold's long-held status as the ultimate store of value.

With U.S. national debt exceeding AU$51.91 trillion (US$34 trillion) at the start of 2024 due to stimulus measures from the pandemic, there are bold predictions that Bitcoin's value could skyrocket to AU$1.52 million (US$1 million) per Bitcoin.

In a recent update, Joao Gomes, a finance professor at the Wharton Business School, cautions that the spiralling U.S. debt could precipitate a financial crisis as early as next year, potentially destabilising the incoming administration's economic plans.

Last month, Nassim Taleb, author of 'The Black Swan,' voiced his opinion on the U.S. economy's "death spiral," blaming the political system's reluctance to address the nation's escalating debt. Genevieve Roch-Decter, a former asset manager and writer of the Grit Capital newsletter, concisely summed up the sentiment with a foreboding message on her platform: "This doesn't end well."
 

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