Government Debt Fuels Debasement Trade, Boosting Bitcoin
The U.S. government's growing debt has sparked concerns about currency debasement, and according to Grayscale, this trend will benefit Bitcoin.
The Treasury Department announced last week that it would double the size of its liquidity-support buyback operations, which led to a decline in the value of the dollar but boosted non-yielding assets like Bitcoin.
Grayscale's head of research, Zach Pandl, noted that 'unchecked government debt growth undermines the credibility of fiat currencies' and drives investors towards alternative stores of value like physical gold and certain cryptocurrencies.
The note also pointed out that the Treasury is treating symptoms rather than curing the disease, referring to the heavy growth in government debt driving up borrowing costs.