Biden’s plan calls for public debt of up to $ 8.2 trillion by 2031.
The dollar has depreciated more than 3,600% against bitcoin, in just 4 years.
The policy of issuing debt in the United States could intensify with the arrival of Joe Biden to the presidency. In fact, leaked documents allude to a budget request for next year in the order of $ 6 trillion in public spending.
According to a New York Times report, Biden’s plan calls for public spending higher than levels not seen since World War II. In addition, the deficit of the North American country would be around $ 1.3 trillion over the next decade, reviews the North American media.
The report is based on documents obtained by the New York Times newsroom, which is why the official announcement of Biden’s request for a budget increase, which would seek to increase public spending, is still awaited. to cover its policy of expanding the scope of social security and infrastructure improvements.
The spending levels envisaged in Biden’s policies would only increase public spending even more in the following years. The budget is expected to reach an even higher amount in the near future, with about $ 8.2 trillion by 2031.
Although there is no direct correlation, the issuance of public debt, the possibility of increasing inflation and the fall of the dollar indices are factors with potential upward momentum for the price of bitcoin.
The highest point of the dollar index (DXY) since 2017 was in March 2020. At that point, the DXY was above 99. Since then, the indicator of the power of the dollar has fallen again to its lowest levels in recent years, around the 90s, according to Investing data.
Bitcoin, meanwhile, entered a bull cycle that saw it break its all-time high of late 2017. Now, after a steep drop to over 25% in a matter of a week, bitcoin remains 50% above that all-time high previous.
Fall of the dollar index during the last year. Source: Investing.
A dollar in full depreciation against bitcoin
The depreciation of the dollar becomes more visible when measured against bitcoin, taking into account that the US currency is still the main reserve currency in the world and the cryptocurrency it is being used as a store of value by large investors.
In just 4 years of the mandate of Biden’s predecessor, Donald Trump, the dollar fell more than 3,600% against bitcoin, as CriptoNoticias reviewed last January, regarding the arrival of Biden to the White House. At that time, bitcoin was trading just over $ 34,500. Now, after falling from its peak of $ 64,000 set in mid-April, the cryptocurrency is hovering around $ 40,000, still above the value at the beginning of the year.
Monetary issuance policy accelerated markedly as a result of the crisis caused by the pandemic. Still with Trump at the helm, the United States embarked on a very aggressive pace of debt issuance to issue economic relief bonds to millions of American citizens.
According to various reports, the Americans have invested these aid in both bitcoin and stocks. The growth of public debt, the funds that go towards bitcoin and other investments and the sustained devaluation of the dollar, then, pose a possible recovery scenario for BTC and the rest of the cryptocurrency market. However, that recovery could take months as BTC resumes its bullish course, as evaluated just a few days ago by market analyst Willy Woo.