Crypto asset manager Bitwise says the possibility of countries failing to repay their debts may drive Bitcoin (BTC) to an astronomical new all-time high.
In a new report, Bitwise analysts say that growing debt levels of countries and the increasing odds of sovereign default may send Bitcoin to $230,000, a more than 110% increase from its current value, under the assumption that more investors will pour into the flagship crypto asset as a hedge.
[adinserter block="1"]“As we have pointed out in our latest monthly report as well, Bitcoin can provide an alternative ‘portfolio insurance’ against widespread sovereign defaults as a scarce decentralized asset which is free of counterparty risks.
Quantitative models estimate Bitcoin’s hypothetical ‘fair value’ amid the current sovereign default probabilities at around $230,000 today. This estimation is dovetailed by Bitcoin’s increasing scarcity which also points to an ascent towards $200,000 by the end of the year.”
Bitwise also suggests that the United States’ mounting debt level may lead to debasement of the dollar, potentially making Bitcoin a more attractive asset to park wealth.
“We also expect that the US fiscal debt situation will most likely continue to deteriorate over the coming years which is also the official projection by the Congressional Budget Office (CBO): net interest expenses will likely triple towards the end of this decade already – from ~$1 trillion to ~$3 trillion by the year 2030. Non-discretionary government outlays – i.e. those that are mandatory and required by law, such as interest expenses, social security, unemployment insurance etc. – already exceed 100% of fiscal revenues. The proposed tax cuts by the Trump administration will likely exacerbate this situation.”
Bitcoin is trading for $109,467 at time of writing.
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