Bitcoin, Ethereum, Zilliqa, IOTA, EOS brace for a $50 trillion earthquake

Invezz.com – Cryptocurrency prices came under pressure in May as investors focused on the debt ceiling debate in the United States. With the two sides maintaining extreme positions, there was a likelihood that the US will default on its obligations. The likelihood of a default ended when Biden and McCarthy reached a deal during the weekend. This deal could have an impact on cryptocurrencies like , IOTA, and Zilliqa.

US public debt to keep surging

The US is expected to continue growing its debt in the coming years. As I wrote in this article, US debt has gone parabolic in the past few years. It has soared to $31.4 trillion from $9 trillion in 2008. Since the pandemic started in 2020, debt has soared by more than $8 trillion.

The debt ceiling deal passed by the House of Representatives is set to reduce budget deficit by $1.5 trillion in the next ten years. However, as we have seen in the past, estimates by the American government are usually wrong in most periods. Also, the deal is set to increase US debt by $4 trillion in the next few years.

In all, the US is expected to breach the $50 trillion public debt by 2030. That will be a substantial figure considering that the world GDP is expected to reach $110 trillion in 2024.

Most importantly, the US is expected to move to a social security hole in the next decade. Most estimates are that the country’s social security reserves by 2034. When this happens, taxes will need to rise and payouts to seniors reduce.

Therefore, there is a likelihood that buyers of US debt, who include Japan and China, will ask for more interest as risks of a default rise.

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Crypto price outlook as US debt surges

It is unclear how cryptocurrencies and other assets will perform as the US public debt surges to over $50 trillion in the next few years. What is clear is that safe havens like gold could do well as investors and central banks boost their purchases.

If this happens, we could see Bitcoin price could also jump since the coin is seen as a digital or 21st-century alternative to gold. Consider the statement below from JP Morgan (NYSE:), who wrote that:

“With the gold price rising above $2,000, the value of gold held for investment purposes outside central banks is currently valued at around $3 trillion. In turn, this implies a $45,000 price for under the assumption that bitcoin equalizes gold in private investors’ portfolios in risk capital or volume-adjusted terms.”

Therefore, if this happens, we could see Bitcoin price continue to rise in the next few years. Because of the close correlation among cryptocurrencies, there is a possibility that other coins like , Zilliqa, IOTA, and will also rise.

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