US President Donald Trump recently stated that cryptocurrencies could be used to alleviate the ballooning US national debt, which has recently exceeded $38 trillion. Trump’s statement has triggered a global conversation about the role of digital assets, especially Bitcoin (BTC), in addressing the US’s debt crisis.
Can Bitcoin Be Used To Clear The US’ National Debt?
Speaking at a private conference, Trump said that crypto “has got a great future.” He hinted that maybe the US could pay off the $35 trillion debt in crypto. The president said:
I’ll write on a little piece of paper, $35 trillion in crypto – we have no debt. That’s what I like.
It should be noted that this is not the first time that Trump has alluded to the idea of using digital assets to wipe out the inflating American debt. In fact, Trump has been on record multiple times saying that his administration could use BTC to “save America.”
This begs the question, how high will Bitcoin actually need to be to pay off the US’ national debt. Asset manager Fidelity has performed some calculations to arrive at an approximate BTC price that could, theoretically, do the trick.
According to calculations based on Treasury data and blockchain supply metrics, BTC’s circulating supply of 19.93 million BTC would need to increase significantly in value to pay off the massive $38 trillion debt.
Mathematically speaking, by dividing the US’s $38 billion in national debt by 19.93 million supply, one Bitcoin will surge to $1.9 million. At such a high price, BTC’s market cap would be roughly equal to the US’s total debt.
However, the US doesn’t own all the 19.93 million BTC. According to the latest data, the US only owns about 326,373 BTC, almost 1.6% of the cryptocurrency’s total supply, most of it acquired through seizures from criminal investigations.
If the US tried to pay off its debt only using the amount of BTC it currently holds, then the digital asset’s price could increase exponentially. Specifically, BTC could surge as high as $116.5 million, almost 1000-times more than its current trading price.
At such a price level, BTC’s total market cap would be around $230 trillion – a figure that is even higher than the world’s total GDP as of today. Any attempt to sell BTC at such a price would collapse its thin liquidity, resulting in a massive crash for the flagship cryptocurrency.
Are Institutions Aware Of BTC’s Potential?
While Bitcoin reaching a price tag of $116.5 million might sound impossible currently, recent BTC accumulation trends show that institutions are confident that the digital asset may still have a lot more room to grow.
Recent trading data from the US suggests that crypto transactions have witnessed a sharp uptick since Trump assumed the Presidency. At press time, BTC trades at $110,052, up 0.1% in the past 24 hours.
Featured image from Unsplash.com, chart from TradingView.com
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