Erik Voorhees, ShapeShift CEO has stated that the rising debt of the United States, hovering around $21.7 trillion as of November, would cause a huge spike in cryptocurrency.
Ethereum (ETH) Price Today – ETH / USD
“When the next global financial crisis occurs, and the world realizes organizations with $20 trillion in debt can’t possibly ever pay it back and thus must print it instead, and thus fiat is doomed. Watch what happens to crypto.”
The CEO suggested that the government as well as the federal reserve will be forced to print Fiat money to repay the national debt and this will lead to inflation. It will also lead to a decline in the strength of the US dollar.
Financial and other major institutions are bothered by this development
The largest asset manager in the globe with over $6.317 trillion in assets under management, BlackRock, is among many financial institutions expressing concern over the rapidly increasing debt.
Larry Fink, the CEO of the conglomerate stated that the government is heading for a supply problem because of the increasing budget deficit. Starting next year, Fink notes that the country could be forced to borrow an additional $1 trillion per year.
The US dollar’s rising inflation rate has become too high and it can no longer sustain the economy.
“That could be the real issue related to everything: where we have interest rates becoming too high to sustain the economy with its growth rates,”
A professor at NYU Stern School, Nouriel Roubini, a crypto skeptic also echoed Fink’s sentiment. He emphasized that the interest rate is so high that the economy cannot match with it. He said, as he predicted a major financial crises in less than two years:
“Second, because the stimulus was poorly timed, the US economy is now overheating, and inflation is rising above target. The US Federal Reserve will thus continue to raise the federal funds rate from its current 2% to at least 3.5% by 2020, and that will likely push up short- and long-term interest rates as well as the US dollar,”
If the predictions of economists are right, the dollar could experience a major drop and investors may begin to store up gold and crypto as they are not dependent on the global economy.
It will get more interesting
Founder of Civic, partner at Multicoin capital, Vinny Lingham, says more wealth would be created in cryptocurrency in ten years compared to the past ten years. This will happen despite the large corrections faced by the market and it will last for a couple of years.
“More wealth will be created in crypto over the next 10 years, than over the prior 10 years. But remember, like any success story, it’s not going to be a straight line up. Keep believing and just be patient.”