Rising Global Debt Fuels Bitcoin Surge Amid Dollar Devaluation
The global debt has been rising steadily, and this trend is boosting the value of assets like Bitcoin. According to the International Financial Association, the total global debt increased by $10 trillion in the first half of the year, reaching a record high of $36.5 trillion. The US debt alone surpassed $40 trillion, with interest payments exceeding $1.27 trillion annually, surpassing defense and healthcare spending.
Nic Puckrin, founder and cross-asset analyst at Coin Bureau, believes that this environment is favorable for assets like Bitcoin and gold, which are often referred to as 'devaluation currencies'. As the debt levels of major economies increase, it becomes easier for them to reduce their actual borrowing costs and allow inflation to erode the value of their debts.
The purchasing power of the US dollar has decreased by 23% since 2020, while assets have only risen by 30%. This means that investors are essentially breaking even in terms of actual purchasing power. The US inflation rate has been above the Federal Reserve's target of 2% for 60 consecutive months.