It’s ‘Time’: The Real ‘Critical’ $365 Trillion Reason Why Bitcoin Price Suddenly Skyrockets
Bitcoin and crypto prices have soared since their summer slump, with some small coins leaving Bitcoin in the dust – and huge gains are still expected.
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The price of bitcoin approached $90,000 per bitcoin earlier this month, sparking a wave of bullish bitcoin price predictions.
Now, as Elon Musk quietly prepares for Bitcoin’s next bull run, International Monetary Fund (IMF) Director Kristalina Georgieva warned that the world’s $365 trillion debt is at a “critical” level, calling it “time” to act as so-called depreciation trading pushes Bitcoin and gold higher.
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U.S. President Donald Trump has seen U.S. debt pile up to more than $40 trillion, so-called depreciation trades have driven up the price of Bitcoin significantly.
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Global debt increased by $10 trillion in the first half to $365 trillion, according to the Institute of International Finance (IIF).
Debt has become a political issue, creating a “vicious cycle between elections and short-term quick fixes, and long-term vulnerability as the marginal utility of higher debt declines,” the IIF warned.
US debt alone has soared to $40 trillion, sparking a rift last year between SpaceX and Tesla billionaire Elon Musk and US President Donald Trump, with Musk warning at the time that the US was hurtling towards “bankruptcy”.
Interest payments on the U.S. national debt have soared to $1.27 trillion each year, this year outpacing defense spending, Medicaid and second only to Social Security.
“As benchmark rates rise, interest costs are expected to rise, while structural pressures from public health and pension spending remain largely ignored,” the IIF added.
The Federal Reserve raised interest rates this month amid concerns that the $100-a-barrel oil price would add to inflationary pressures, in turn pushing rates higher in coming months.
The IMF’s Georgieva told the BBC that it is “time to act”, calling for political “courage” to take the necessary measures.
“There are these two things that need to be done: reducing debt levels, making fiscal consolidation a priority and ensuring that central banks fulfill their price stability mandate,” Georgieva said.
“It is impossible to emphasize strongly enough the critical importance of having the courage to take the necessary steps. These are politically difficult steps to take, but necessary steps to take.”
Uncontrolled government spending, the initial catalyst for the creation of bitcoin by the mysterious Satoshi Nakamoto in 2008, has propelled bitcoin higher in recent years, with Covid-era stimulus triggering a massive rise in bitcoin prices in 2001.
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The price of bitcoin has climbed rapidly in recent years, driven higher by skyrocketing government debt levels.
Forbes Digital Assets
“The environment is favorable for the devaluation of assets, notably bitcoin and gold. This is partly why we have seen bitcoin rally recently. Central bank purchases of gold have also accelerated again,” Nic Puckrin, multi-asset analyst and founder of Currency Officesaid in emailed comments.
“The more major economies struggle with skyrocketing debt, and the more they try to suppress real borrowing costs and allow inflation to erode the value of their debt, the more devaluation swaps will make sense.”
Along with the surge in bitcoin, gold, stocks and commodities, the US dollar and other government-backed fiat currencies have seen their purchasing power plummet.
“The US dollar has lost 23% of its purchasing power since 2020,” say analysts in the Kobeissi Letter published on X, adding that people should “own assets or be left behind.”
Higher and longer inflation expectations have sent government bond prices tumbling in recent months, leading Treasury yields to rise sharply.
“If your assets have increased by +30% since 2020, you have actually just reached the break-even point in real terms. Inflation has now been above the Fed’s 2% target for 60 consecutive months, and the bond market knows it,” add the Kobeissi analysts.
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