Bitcoin Could Benefit from Soaring US National Debt

The US national debt has surpassed $40 trillion, more than double its level in 2017. This growing debt pile could have a positive impact on Bitcoin's price over the long run.

To understand the relationship between the national debt and Bitcoin, it's essential to look at two key metrics: the deficit as a share of GDP and the debt-to-GDP ratio.

The Congressional Budget Office projects that this year's deficit will reach $1.9 trillion, or 5.8% of the country's GDP. Additionally, debt held by the public is expected to reach 101% of GDP this year, increasing to 120% by 2036.

This trend could lead lenders to demand higher yields to compensate for the rising risk of default, making the problem worse over time.

However, research by Fidelity Digital Assets suggests that expansion of the global money supply could explain as much as 87% of Bitcoin's price variation over the prior 15 years.