Rising US Debt Could Boost Demand for Alternative Stores of Value

Zach Pandl, Chief Research Officer at Grayscale Research, has warned that the rising US national debt could have a significant impact on the financial market. According to him, the increasing debt will put pressure on bonds and reduce confidence in fiat currencies.

Pandl pointed out that investors would be looking for alternative means of storing value, which would favor Bitcoin, Ethereum, and Zcash. He believes that these cryptocurrencies could benefit from a 'debasement trade', where investors turn to assets that provide monetary and financial exposures outside the norm.

The US Treasury has announced that it will conduct more open market purchases of long-term notes and bonds prior to their retirement. However, Pandl noted that bond repurchases are just a short-term fix and do not address the underlying fiscal issue of the country.

With the national debt exceeding $40 trillion for the first time, Pandl warned that times have changed since the global financial crisis. He explained that both government and private sector borrowing to fund artificial intelligence is putting pressure on bonds and fiat credibility.