Analysts suggest Bitcoin could solidify its role as digital gold, but this shift may impact the U.S. economy.
Zach Pandl from Grayscale Investments believes a weakening U.S. dollar might drive Bitcoin to unprecedented highs. He anticipates that the dollar could significantly depreciate over the next decade or sooner, depending on upcoming election outcomes and economic policies.
Pandl, formerly a macroeconomic strategist at Goldman Sachs, warns that as U.S. debt rises—currently around $33.2 trillion, far exceeding GDP—the government might struggle with either defaulting or inflating the currency to manage debt.
This situation could enhance Bitcoin’s appeal as it remains immune to inflation due to its fixed supply of 21 million coins.
While the prospect of Bitcoin benefitting from a weaker dollar is intriguing, it’s important to note that the cryptocurrency market remains highly speculative. Investors should consider that Bitcoin’s volatility and its status as a relatively new asset class could introduce significant risks.
As such, despite its potential for growth, Bitcoin’s long-term stability as a store of value compared to more established assets like gold is still under debate.
Research from investment firm VanEck suggests that while the U.S. government is debating a potential Bitcoin reserve, 21 states are already moving forward with plans to acquire Bitcoin.
JPMorgan reports that institutional interest in Bitcoin and Ethereum futures is waning, leaving the crypto market in a vulnerable position.
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In just one year, U.S. spot Bitcoin exchange-traded funds (ETFs) have crossed a major milestone, exceeding $750 billion in total trading volume since their introduction in January 2024.