How Bitcoin will rise due to war spending and US presidents ‘spending like drunken sailors’ – DL News

For more than three months, the Bitcoin price has been stuck between $73,000 and $59,000.

It takes a long time for such a volatile asset to stay in the same price range, and market participants – like PayPal co-founder Peter Thiel – are wondering if Bitcoin has finally lost momentum.

But until “the government actually stops spending money like drunken sailors,” Bitcoin’s future is secure, said Mike Novogratz, CEO of crypto investment firm Galaxy Digital CNBC Tuesday.

The US budget deficit is expected to rise by 27 percent to $1.9 trillion next year, the Congressional Budget Office reported two weeks ago.

The main reasons: the costs of student loan forgiveness, health care, fixing bank failures and military aid to Ukraine and Israel.

However, Novogratz said this is not a problem specific to the Biden administration.

Former President Donald Trump “increased government spending as much as Joe Biden,” Novogratz said.

“These were the two presidents with the worst debt increases in the history of our country,” he added.

Bitcoin was designed so that only 21 million Bitcoins can exist in total.

Because of its hard supply cap, the leading cryptocurrency is seen by some as a hedge against government spending and inflation.

War spending

Arthur Hayes, co-founder of crypto exchange BitMEX, echoed Novogratz on the issue of government spending in a blog post on Tuesday.

In particular, he stressed that US military spending, currently focused on Ukraine and Israel, is likely to only continue to rise.

“Nations are turning inward and making sure that all sectors of the national economy are prepared to support the war effort,” Hayes said. “This means asking savers to finance their country’s war spending.”

The U.S. government could accomplish this in two ways: It could instruct banks to lend to certain industries, or it could instruct them to buy government bonds at below-market prices so that the government itself can pay out subsidies.

In both cases, Hayes said, inflation will destroy people’s savings.

“The only way out, assuming capital controls are not imposed, is to buy a store of value outside the system like Bitcoin,” Hayes said.

Novogratz, meanwhile, said that until spending is under control, “Bitcoin makes perfect sense as a core investment.”

Tom Carreras is a markets correspondent at DL News. Do you have a tip about Bitcoin and macroeconomics? Contact us at [email protected]