Investors favor Bitcoin and gold over bonds.

Indra55

On April 19th, according to Reuters, market observers said concerns about the rapid increase in US government debt have been partially driving the surge in gold and Bitcoin prices recently, despite the US Treasury market remaining relatively optimistic about the country's fiscal outlook so far.

The US budget deficit for the fiscal year 2023 has widened to $1.7 trillion and is expected to reach $2.6 trillion by 2034. At the same time, US public debt is expected to reach 106% of GDP by 2028, up from 97% in fiscal year 2023.

Since 2007, when it was $5 trillion, US debt has skyrocketed to $27 trillion. The growing US government debt has garnered more attention, and interest payments have taken up a larger share, sometimes even exceeding defense spending. This worsening trend has driven demand for Bitcoin and gold, which are often used as hedges against inflation and the declining purchasing power of the US dollar.

Brad Bechtel, global head of foreign exchange at Jefferies, said concerns about the US debt cycle and currency depreciation have fueled the narratives around Bitcoin and gold, leading investors to allocate more to such assets.

Lawrence H. White, economics professor at George Mason University, believes that interest in Bitcoin and gold has also been fueled by increasing inflationary turmoil. What is more worrying is that debt and deficits continue to rise during peacetime and full employment, and the next recession may trigger even larger debt growth.

In addition to hedging risks, the rise in Bitcoin prices has also been influenced by the launch of new ETFs and the upcoming halving event. Gold's historic highs, meanwhile, have benefited from expectations of interest rate cuts by central banks and the diversification of foreign reserves. However, the rapid deterioration of the US fiscal situation remains a major concern for some investors. Market strategist Michael Hartnett pointed out that recent highs in gold and technology stocks indicate that the US may need to adopt policies such as yield curve control to prevent a debt crisis.

However, Nicholas Colas, co-founder of DataTrek Research, said that several indicators in the Treasury market currently show that bonds have not yet reflected expectations of deteriorating fiscal prospects. Investors still consider the US dollar as a reserve currency and US Treasuries as relatively safe assets. If seeking large-scale risk-free assets, the Treasury market remains the preferred choice.

Yamini003

The issue of bonds also needs to be examined.

Kamal531

It seems that Bitcoin is also receiving a lot of attention.

Jafar224

Bitcoin and gold are both safe havens.