Reuters: Worsening U.S. debt burden raises concerns as investors favor Bitcoin and gold over bonds

According to BlockBeats, on April 19, Reuters reported that market observers said that concerns about the rapid rise in US government debt are part of the reason for the recent surge in gold and Bitcoin prices, although the US Treasury market has remained relatively optimistic about the country's fiscal outlook so far. The US budget deficit has widened to $1.7 trillion in fiscal year 2023 and is expected to reach $2.6 trillion by 2034. At the same time, US public debt is expected to reach 106% of GDP in 2028, up from 97% in fiscal year 2023. Since $5 trillion in 2007, the size of US debt has soared to $27 trillion. The growing US government debt has attracted more attention, and interest payments have also accounted for a larger proportion, sometimes even exceeding defense spending. This worsening trend has driven demand for Bitcoin and gold, which are often used as a hedge against inflation and the decline in the purchasing power of the US dollar. Brad Bechtel, global head of foreign exchange at Jefferies, said that concerns about the US debt cycle and the devaluation of fiat currencies have driven the narrative of Bitcoin and gold, allowing investors to allocate more to such assets. Lawrence H. White, professor of economics at George Mason University, believes that the interest in Bitcoin and gold also stems from the increasing inflationary turbulence. More worryingly, debt and deficits are still rising in peacetime and when the economy is fully employed, and the next recession may trigger a greater debt growth. In addition to hedging risks, the rise in Bitcoin prices is also affected by the launch of new ETFs and the upcoming halving event. Gold has hit a record high, thanks to expectations of interest rate cuts by central banks and the need to diversify foreign reserves. Nevertheless, the rapid deterioration of the US fiscal situation remains a major concern for some investors. Market strategist Michael Hartnett pointed out that the recent highs in gold and technology stocks indicate that the United States has to adopt policies such as yield curve control to prevent a debt crisis. However, Nicholas Colas, co-founder of DataTrek Research, said that multiple indicators in the current Treasury market show that bonds have not yet reflected expectations of a worsening fiscal outlook. Investors still regard the US dollar as a reserve currency and US Treasuries as relatively safe assets. If you are looking for large-scale risk-free assets, the U.S. Treasury market remains the first choice.