US govt $1.5T debt interest will be equal 3X Bitcoin market cap in 2023

The U.S. will pay over $1 trillion in debt interest next year, the equivalent of three or more Bitcoin market caps at current prices. 10505 Total views 105 Total shares Listen to article 0:00 Markets News Own this piece of history

Collect this article as an NFT Commentators believe that Bitcoin (BTC) bulls do not need to wait long for the United States to start printing money again.

The latest analysis of U.S. macroeconomic data has led one market strategist to predict quantitative tightening (QT) ending to avoid a catastrophic debt crisis.Analyst: Fed will have no choice with rate cuts

The U.S. Federal Reserve continues to remove liquidity from the financial system to fight inflation, reversing years of COVID-19-era money printing.

While interest rate hikes look set to continue declining in scope, some now believe that the Fed will soon have only one option to halt the process altogether.

Why the Fed will have no choice but to cut or risk a catastrophic debt crisis, Sven Henrich, founder of NorthmanTrader, summarized on Jan. 27.Higher for longer is a fantasy not rooted in math reality.

Henrich uploaded a chart showing interest payments on current U.S. government expenditure, now hurtling toward $1 trillion a year.

A dizzying number, the interest comes from U.S. government debt being over $31 trillion, with the Fed printing trillions of dollars since March 2020. Since then, interest payments have increased by 42%, Henrich noted.

The phenomenon has not gone unnoticed elsewhere in crypto circles. Popular Twitter account Wall Street Silver compared the interest payments as a portion of U.S. tax revenue.

US paid $853 Billion in Interest for $31 Trillion Debt in 2022; More than Defense Budget in 2023. If the Fed keeps rates at these levels (or higher) we will be at $1.2 trillion to $1.5 trillion in interest paid on the debt, itwrote. The US govt collects about $4.9 trillion in taxes.Interest rates on U.S. government debt chart (screenshot). Source: Wall Street Silver/ Twitter

Such a scenario might be music to the ears of those with significant Bitcoin exposure. Periods of easy liquidity have corresponded with increased appetite for risk assets across the mainstream investment world.

The Feds unwinding of that policy accompanied Bitcoins 2022 bear market, and a pivot in interest rate hikes is thus seen by many as the first sign of the good times returning. Crypto pain before pleasure?

Not everyone, however, agrees that the impact on risk assets, including crypto, will be all-out positive prior to that.

Related:Bitcoin so bullish at $23K as analyst reveals new BTC price metrics

As Cointelegraph reported, ex-BitMEX CEO Arthur Hayes believes that chaos will come first, tanking Bitcoin and altcoins to new lows before any sort of long-term renaissance kicks in.

If the Fed faces a complete lack of options to avoid a meltdown, Hayes believes that the damage will have already been done before QT gives way to quantitative easing.

This scenario is less ideal because it would mean that everyone who is buying risky assets now would be in store for massive drawdowns in performance. 2023 could be just as bad as 2022 until the Fed pivots, he wrote in a blog post this month.

The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph. #Bitcoin #Federal Reserve #Bitcoin Price #Markets #Inflation Related News How do you assess the value of an NFT? Opinion: 3 tips for trading Ethereum this year Why is the crypto market up today? Bitcoin price corrected, but bulls are positioned to profit in Fridays $580M BTC options expiry BTC metrics exit capitulation 5 things to know in Bitcoin this week