In the past weeks, the Bitcoin bulls showed great strength in pushing the price of BTC back to $500,000. Meanwhile, members of the US government have reopened Pandora’s Box in an effort to raise their debt ceiling: to mint a $1 trillion coin and prevent them from defaulting on their national debt.
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Like Peter St. Ong, Ph.D. And fellow Heritage Foundation economic researcher, explains in a post titled “Trillion Dollar Coin: Rocket Fuel for Bitcoin,” the action was delayed at the expense of $480 billion taken from the American public, but BTC and its owner have already benefited.
As Ong noted, the US government has been pushing to reduce its debt for several decades. In fact, this isn’t the first time a government official has proposed minting a $1 trillion coin and keeping it on the US Treasury’s balance sheet to raise its debt ceiling.
In this sense, the researcher referred to the trillion dollar coin as a “gimmick to exploit a legal loophole.” The decision has been postponed for the time being, but the US government may return to consider it if the economic situation worsens. Thus, it makes Bitcoin much stronger.
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The scenario in which the US decides to issue a $1 trillion currency may have serious consequences for the global economy due to the US dollar’s standing as the global reserve currency. Ong said the following about the chaos that might occur:
(…) The end result of a trillion dollar coin is radically higher money creation, radically higher government uptake of real resources from the private sector, and a federal government that has finally been able to overshoot the credit card limit once and for all. He finally brought them face to face with the ultimate debt ceiling in the universe: the bond market.
How Bitcoin has benefited from the 1 trillion dollar currency
The research claimed that the fact that the discussion of minting a $1 trillion coin is already being considered by the US government, is indeed a bullish factor for Bitcoin. BTC was created as a result of a financial crisis and a lack of confidence in the central authorities that govern the global money supply.
In this sense, Bitcoin acts as insurance, a way of opting out of a system that appears to trap “the pattern of destroying the world every decade,” Onge said. Inflation, one of the main problems emerging from COVID-19, could be much worse if dealt with by other branches of the US government. Search said:
(…) If you think central banks like to print money, just wait until you meet with Congress. And as a corollary, if the bitcoin price likes fed money printers, wait until they meet the $1 trillion treasury release for the sport.
In the end, Onge rules out the possibility of a $1 trillion coin, but the symbol for inflation and mistrust of government is in place. Thus, it becomes just another reason to hold bitcoin.
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At the time of writing, BTC is trading at $54,976 with a gain of 1.3% on the daily chart.