The escalating levels of debt in the United States have prompted investors to turn their focus towards Bitcoin and gold as a safeguard against inflation. This surge in US debt has led to a growing interest in Bitcoin (BTC) and gold as investors seek to protect themselves against inflation and broader economic factors. A recent report from Reuters highlights the apprehension surrounding the country's fiscal trajectory, which has contributed to the rise in Bitcoin's value.

The mounting debt ratio, combined with interest payments, has put a strain on government spending, at times surpassing allocated budgets. The US budget deficit expanded to $1.7 trillion in fiscal year 2023 and is projected to reach $2.6 trillion by 2034, as per the Congressional Budget Office. Concurrently, US government debt held by the public is set to hit a record 106% of GDP in 2028, up from 97% in fiscal year 2023. This surge has seen the debt soar from $17 trillion in early 2020 to $27 trillion, with a mere $5 trillion in 2007.

Rationale for Bitcoin and Gold

Brad Bechtel, the Head of FX at Jefferies, emphasized that the debt cycle and currency devaluation have spurred specific narratives, prompting financial entities to increase their exposure to Bitcoin and gold. While the debate between Gold and Bitcoin has persisted for years, recent macroeconomic events have further fueled the influx into these assets.

Lawrence White, an Economics professor at George Mason University, pointed out that the interest in both assets stems from the unstable inflation witnessed over the past two years. However, it's not just debt and inflation driving the recent surge in Bitcoin's price.

Influence of Spot ETFs and Halving on Adoption

Bechtel highlighted that the approval of spot Bitcoin ETFs by the Securities and Exchange Commission (SEC) has amplified interest in the cryptocurrency. This approval led to a surge in Bitcoin investments, propelling its price above $73,000. Additionally, the anticipation surrounding Bitcoin halving has generated further interest, seen as a bullish phase for the asset. Traders are optimistic about potential rate cuts, cooling inflation, and are actively increasing their positions in the market leader.

Simultaneously, the interest in gold can be attributed to macroeconomic factors, with foreign central banks seeking to diversify their reserves. Gold reached a record high of $2,431 per ounce as numerous investors shifted their focus away from fiat currencies.