Federal Reserve Chairman Jerome Powell has suggested that a critical time is coming for Bitcoin, a prediction based on the US budget deficit being projected to reach a staggering $1.9 trillion.
Bitcoin has recently suffered a major price crash, but uncertainty hangs over the market and could signal further trouble and volatility. The cryptocurrency’s price plummeted to its lowest since February but has since stabilized, according to market analysts.
Treasury Secretary Janet Yellen warned about the nation’s soaring $34 trillion debt and suggested the price of Bitcoin could reach unprecedented highs within the next 18 months.
Financial experts like Galaxy Digital’s Michael Novogratz argue that the government’s continued excessive spending has made Bitcoin a key asset. Novogratz highlighted the unprecedented debt buildup under both the administrations of former President Donald Trump and President Joe Biden, calling it the worst debt expansion in U.S. history.
Bank of America chief strategist Michael Hartnett noted that the U.S. national debt is growing at a rate of $1 trillion every 100 days, which is leading to a surge in debt-related transactions. He also predicted that a new spot Bitcoin exchange-traded fund (ETF) will be a big success this year, attributing its potential success to a weakening U.S. dollar.
Interest payments on the U.S. debt are expected to reach $870 billion this year, a situation made worse by the Federal Reserve’s aggressive interest rate hikes in response to post-COVID inflation. The Congressional Budget Office projects the budget deficit will increase by 27% next year, putting further pressure on the economic situation.
Additionally, according to CNBC, the U.S. national debt has been steadily growing at a rate of about $1 trillion every 100 days, reaching nearly $34.4 trillion at the start of the year. This accelerating pace began in June 2023, and on January 4, 2024, the debt exceeded $34 trillion. Bank of America’s Michael Hartnett predicts that this pattern of rapid growth will continue.
