The US Congress has approved raising the national debt limit by another $2.5 trillion – and cryptocurrency experts are wondering how this could affect Bitcoin.
The US government is close to postponing its federal default for at least a year after Congress finally approved an impressive $2.5 trillion debt limit increase.
With a potentially rising debt ceiling in excess of $30 trillion and increased massive printing of US dollars already causing rising inflation, the question becomes – what about Bitcoin?
The US House of Representatives approved the previous debt limit increase in October 2021 with a more ‘modest’ increase of $480 billion, bringing the debt limit to $28.9 trillion. Although Republicans initially tried to oppose the bill due to Democrats’ plans to increase social and climate spending, the bill was quickly signed into law by President Joe Biden.
It was known at the time that this particular cap increase would not do the country any good in the long run, as the next hearing was due in December. As December approached, the scenario largely repeated itself, with Republicans seemingly trying to fight the bill, but the Democrats gained the upper hand.
With a vote of 221 to 209, the bill passed Congress and is now in the hands of President Biden, who is expected to sign it soon. If he does, the bill will increase the federal government’s debt limit by $2.5 trillion to $31.4 trillion. But more importantly for the world’s most powerful economy, it will delay the threat of a government default until at least early 2023.
Speaker Nancy Pelosi of California praised the passage of the bill, saying: “The full faith and credit of the United States should never be questioned. The health of our economy should never be in jeopardy.”
In contrast, Republican Representative Jodey Arrington was disappointed with the final outcome, noting that the country’s debt level would be at its highest level since World War II and that now “we are not at war.”
With the US adding excessive amounts of its national currency over the past two years and raising debt limits frequently, the consequences are already more than obvious. Inflation rates in the US, which have historically risen by 3.24%, have risen by much higher percentages in the last six months.
This led to an increase of 6.8% in November – the highest in some 40 years. Even those behind some of the most important decisions – Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen – have stopped short of calling the rapidly rising inflation “transitory”.
On the other side there is Bitcoin. It has programmed inflation rates that actually fall every four years or so. It has no central authority behind it to decide whether the amount of newly created bitcoin should almost double in a few years compared to the dollar. It has a limited supply that cannot be increased by a presidential signature.
This has started to attract prominent investors from outside the cryptocurrency industry. Names such as Paul Tudor Jones III, Stan Druckenmiller, Thoma Bravo, Anthony Scaramucci and others began pouring money into BTC and often praised it as an investment vehicle against rising inflation.
Bitcoin’s $2.5 trillion ad
With the new $2.5 trillion debt limit increase just awaiting the signature of President Biden, who is a Democrat, CryptoPotato decided to contact some crypto industry insiders and experts to gauge their opinion on the potential effects on BTC.
Max Keiser, host of the Keizer Report and a well-known BTC supporter, said the bill created “perfect conditions for Bitcoin” as the US government “capitulated to the hungry, insatiable dogs of hyperinflation”.
“I hate to see America fall apart, but I don’t have more than a few dollars, so I don’t care,” – he added.
Scott Melker, known as the Wolf of All Streets, pointed out that bitcoin is an uncorrelated asset that offers “idiosyncratic risk for an experienced investor with a long-term horizon”.
“Short-term news, such as the inevitable debt ceiling increase, is a minor blip on the radar for Bitcoin. Everyone knows that the government will continue to print money and raise the debt ceiling when necessary, which is largely priced into Bitcoin’s importance and use case – as a hedge against this nonsense.” – he concluded.
Tyler Winklevoss, co-founder of Gemini (also co-founder of the social media platform on which FaceBook was founded) and an early user of BTC, believes that the Senate approval would actually work as “a $2.5 trillion Bitcoin ad”. Michael Saylor shared a similar opinion, responding: “it seems that Bitcoin has the backing of the government”.
20/12/2021 – Mr.Advice NEWS