If the debt limit disappears, the incentives to buy bitcoin increase.
In a world with unlimited governments to spend, Bitcoin becomes more relevant than ever.
President Donald Trump publicly declared his support to a measure that has traditionally been rejected by many conservative sectors of the United States: the total elimination of the debt roof.
In words of the president, “The debt limit should be completely eliminated to avoid an economic catastrophe”. Although he said it as a gesture according to Democratic Senator Elizabeth Warren, her words could have much deeper repercussions than it seems. And at the center of that impact is Bitcoin.
The debt roof It is a fiscal tool established by the United States Congress that sets a limit to the indebtedness of the federal government. From the market perspective, eliminating debt roof is equivalent to authorizing the US government to finance its deficits without political limits. In practical terms, this means that the Treasury could issue debt indefinitely, and the Federal Reserve could continue to expand its balance to absorb it if necessary. It is, in essence, a white letter to increase the monetary base as the expense requires it.
And if something has demonstrated recent history, it is that monetary expansion cycles usually benefit scarce and non -sovereign assets, such as Bitcoin.
In that hypothetical scenario (because for now it was nothing more than a Trump publication in X), Bitcoin is consolidated as strategic coverage against the systemic risk of the dollar. Unlike national currencies, whose issuance depends on political decisions, Bitcoin has an unalterable monetary policy: there will only be 21 million.
If the debt limit disappears, incentives to buy bitcoin increase. With a free state to borrow without brake, the pressure on the Federal Reserve to monetize that debt will be constant, which could feed new inflation cycles.
In a world where governments have no limits to spend, Bitcoin becomes more relevant than ever.
