Global Debt Rises, Bitcoin Benefits from Declining Fiat Purchasing Power

Huo Xing Finance reports that on September 26, according to Forbes, Bitcoin recently approached $90,000 earlier this month. Meanwhile, global debt continues to rise, and the “currency debasement trade”—driven by concerns over the declining purchasing power of fiat currencies—has become one of the factors propelling assets like Bitcoin and gold higher. Data from the Institute of International Finance shows that global debt increased by $10 trillion in the first half of this year, surpassing $365 trillion in total. U.S. debt has exceeded $40 trillion, with annual interest payments rising to $1.27 trillion—surpassing defense and Medicaid spending, and only trailing Social Security expenditures. The institute warns that as benchmark interest rates rise, interest costs will continue to increase. Nic Puckrin, founder of Coin Bureau and cross-asset analyst, stated that the current environment favors “debasement assets” such as Bitcoin and gold, which is one reason for Bitcoin’s recent rally. The larger the debt levels of major economies, the more likely they are to suppress real borrowing costs and allow inflation to erode the real value of debt, thereby enhancing the appeal of such trades. Analysts at The Kobeissi Letter note that the dollar’s purchasing power has declined by 23% since 2020; if assets have only risen by 30% over the same period, investors have essentially broken even in real purchasing power terms. U.S. inflation has remained above the Federal Reserve’s 2% target for 60 consecutive months.