Bitcoin appears to serve as a long-term safeguard against inflation, suggests analyst.
The approval of Bitcoin ETFs by the Securities and Exchange Commission (SEC) is a significant milestone for cryptocurrencies in the United States. According to Avik, an analyst for Forbes, this decision allows Americans to buy Bitcoin as protection against a potentially weakening U.S. dollar, which is strained by the increasing federal debt. The SEC’s approval ensures the continued existence of this alternative financial instrument.
Forbes expands on this viewpoint, stating that the SEC’s approval makes it increasingly difficult for the U.S. government to eliminate the domestic Bitcoin market. The article draws parallels with Argentina, where citizens hold a substantial amount of U.S. dollars despite strict currency controls, illustrating the limitations of government intervention in currency markets.
The current U.S. federal debt, which stands at around $34 trillion, creates an environment where Bitcoin’s liquidity becomes more attractive, especially for large institutions seeking a stable value storage. Bitcoin’s potential to rival U.S. Treasury bonds in terms of liquidity becomes evident when its market capitalization approaches $7 trillion, a significant increase from its current value.
However, for Bitcoin to reach such a market cap, it would need broader acceptance as a store of value than it currently enjoys. At this stage, a crackdown on Bitcoin by the U.S. could have counterproductive effects, similar to Argentina’s capital controls. Such a move could signal a lack of confidence in the dollar’s superiority to global markets.
Ideally, the U.S. would address its fiscal challenges, particularly the soaring healthcare spending, to stabilize the federal debt. This fiscal reform would be the most sustainable solution. However, until these reforms are implemented, Bitcoin remains a viable option for Americans seeking financial security in an era of increasing national debt.
Read more: Argentina’s citizens embrace crypto despite the central bank ban. Follow us on Google News.
