Bitcoin, Ethereum, Zilliqa, IOTA, EOS brace for $50 trillion earthquake

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Cryptocurrency prices came under pressure in May as investors focused on the debt ceiling debate in the United States. With both sides maintaining extreme positions, there was a likelihood that the United States would default. The likelihood of a default ended when Biden and McCarthy reached an agreement over the weekend. This agreement could have an impact on cryptocurrencies such as Bitcoin, IOTA and Zilliqa.

US public debt will continue to rise

The United States is expected to continue to increase its debt in the years to come. As I wrote in this article, US debt has gone parabolic in recent years. It has risen from $9 trillion to $31.4 trillion in 2008. Since the start of the pandemic in 2020, the debt has soared by more than $8 trillion.

The debt ceiling agreement passed by the House of Representatives is expected to reduce the budget deficit by $1.5 trillion over the next ten years. However, as we have seen in the past, US government estimates are generally wrong in most time periods. Additionally, the deal is expected to increase US debt by $4 trillion over the next few years.

In total, the United States is expected to break $50 trillion in public debt by 2030. This will be a substantial figure considering that global GDP is expected to reach $110 trillion in 2024.

More importantly, the United States is expected to move into a social security hole over the next decade. Most estimates are that the country’s social security reserves by 2034. When that happens, taxes will have to go up and payments to the elderly go down.

Therefore, buyers of US debt, including Japan and China, are likely to demand more interest as default risks increase.

Crypto Price Outlook as US Debt Rises

It’s unclear how cryptocurrencies and other assets will fare as US public debt soars to over $50 trillion in the next few years. What is clear is that safe havens like gold could do well as investors and central banks increase their buying.

If this happens, we could see that the price of Bitcoin could also rise since the coin is considered a digital or 21st century alternative to gold. Consider the statement below from JP Morgan, who wrote that:

“With the price of gold rising above $2 trillion, the value of gold held for investment purposes outside of central banks is currently valued at around $3 trillion. This in turn implies a $45,000 price for bitcoin assuming bitcoin equals gold in the portfolios of private venture capitalists or in volume-adjusted terms.

Therefore, if this happens, we could see the price of Bitcoin continue to rise over the next few years. Due to the close correlation between cryptocurrencies, it is possible that other coins like Ethereum, Zilliqa, IOTA and XRP will also increase.

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