U.S. debt approaches $40 trillion, investors turn to Bitcoin and gold as a hedge against the depreciation of the dollar
According to CoinDesk, as the U.S. government debt continues to rise, investors are refocusing on scarce assets like Bitcoin and gold, viewing them as tools to hedge against the declining purchasing power of the dollar. Data from the U.S. Treasury shows that as of last Friday, the federal debt has reached a record $39.7 trillion. Market participants point out that U.S. government debt is currently increasing by about $7 billion per day, and in terms of market value, this incremental scale has surpassed most crypto assets.The founder of LondonCryptoClub stated that the rapid growth of U.S. debt is driving the so-called "currency devaluation trade," where investors buy limited-supply assets like gold and Bitcoin to mitigate the long-term devaluation risk of fiat currency. The institution believes that in a "fiscal-dominated" environment, Federal Reserve policy may be influenced by government financing needs, requiring interest rates to remain low while continuously providing liquidity to assist with debt refinancing.Apollo's chief economist Torsten Slok previously warned that the ratio of U.S. debt to GDP has exceeded 120%, leaving limited fiscal stimulus space during future economic recessions. At the same time, the Federal Reserve may find it difficult to cut interest rates significantly as it did in the past, since rate cuts could exacerbate inflation and lower government bond yields, affecting government financing. Currently, Bitcoin prices are maintaining above $65,000, supported by easing tensions between the U.S. and Iran and a drop in oil prices, leading to a rebound in market risk appetite.Meanwhile, Ethereum has recently outperformed Bitcoin, with the ETH/BTC exchange rate breaking through the 100-day and 200-day moving averages, leading the market to believe that altcoin trends may be warming up. However, analysts point out that since its inception in 2010, Bitcoin's price movements have more closely resembled those of tech stocks rather than traditional safe-haven assets, and its safe-haven properties remain controversial.