German-Finnish Internet entrepreneur Kim Dotcom recently reiterated his negative stance on the US dollar and said that cryptocurrencies will eventually compete with the reserve currencies.
“Many economists agree. The US economy and the US dollar will collapse under the enormous debt burden of the US. The pyramid play comes to an end. Crypto and precious metals rise when everything else falls. I think it will happen in the next two years.”
Is An Epic Collapse Coming?
In an interview with the Washington Post, Irwin M. Stelzer of the Hudson Institute said that if the US continues on the path of unlimited borrowing, the economy of what is arguably the world’s most powerful country could collapse.
“ If unlimited borrowing, financed by printing money, would be a way to prosperity, then Venezuela and Zimbabwe would be at the top of the growth charts.”
Citing the testimony of Stelzer, Dotcom said that the growing debt of the US government will inevitably create a bubble, similar to the financial crisis in 2008, which significantly lowers the value of the US dollar. If the dollar falls, Dotcom said, the value of gold and crypto currencies will flourish.
In an interview with Bloomberg, Matt Hougan, Vice President of Research and Development at Bitwise Asset Management, said that cryptocurrencies as an asset class rely on fundamental drivers that are different from the financial market catalysts.
Hougan said that institutional investors and large retailers have begun to recognize cryptocurrencies as a legitimate investment because the entire asset class is moving independently of the traditional financial sector and the global economy. Therefore, assets such as gold and bitcoin, known as robust value stores, will remain untouched by the next financial crisis, economists predict. Matt explained:
“Non-correlation is not the same as inverse correlation, so there is no guarantee that when the market goes down, crypto will increase. In the long run, we think that the fundamental drivers of cryptography are different from the fundamental drivers of stocks and other assets, and we would expect the low correlation to continue.”
In recent years, more and more economists have publicly expressed their concerns about the development of the global financial market and the growing debt of major economies such as the US.
Record $ 13 Trillion in Debt
Earlier this year, the Federal Reserve Bank of New York’s Center for Microeconomic Data’s report found that US households’ total debt has reached $13 trillion, a new all-time high. Mortgage debt, credit card debt and student loans rose 70 times on average, showing instability in the US economy.
Analysts suggest that as economists and investors continue to express their concerns about US debt growth, more individual and institutional investors are likely to shift towards gold and cryptocurrencies to hedge against a financial crisis.