This hidden form of taxation, first used by nations after World War II, allows authorities to finance deficits cheaply, gradually erode the real value of the debt burden through moderate inflation, and avoid the relatively damaging alternatives of outright default or severe austerity. (Other indebted countries like the US, UK and European countries could do the same soon enough.)
Such an environment creates a strong incentive to seek out assets that are limited in supply and can preserve purchasing power, such as bitcoin and gold. BTC has already proven itself: housing prices measured in Bitcoin seem much cheaper than in dollars.
But there is a short-term risk worth noting. The GPIF holds $931 billion in foreign assets, including $232.1 billion in U.S. Treasury bonds. A slight diversion of capital into local assets could create nervousness on Wall Street, potentially leading to risk aversion and selling in all corners of the market, including cryptocurrencies.
For now, however, Bitcoin is buoyant, trading above $64,000, with a key momentum indicator signaling a further bullish change in market trend. There are several other key levels between $65,000 and $80,000 that prices must clear before a true uptrend is confirmed. Stay vigilant!
Read more: For analysis of current altcoin and derivatives activity, see Crypto Markets Today. For a full list of this week’s events, check out CoinDesk’s “Crypto Week Ahead.”
