Topic: What will BTC do in event of US default on its debt? - page 2. (Read 242 times)

News of the US government default is always talked about every year, but I have never seen it happen. The dollar is ruling the world and the US government owns the dollar printer. How can one think of the prospect that they will default?

But assuming that happens, the world financial system will collapse then that could be an opportunity for assets like bitcoin or gold, then gold and bitcoin will become everyone's safe haven. It is impossible to imagine what the bitcoin price achieved at that time would be, but unfortunately, that can only happen in dreams .

"Earnings don't move the overall market; it's the Federal Reserve Board... focus on the central banks, and focus on the movement of liquidity... most people in the market are looking for earnings and conventional measures. It's liquidity that moves markets."
Stanley Druckenmiller

Stanley Druckenmiller was one of the best traders. Working as lead portfolio manager for Quantum Fund (George Soros).
And liquidity affect all markets equally. If there is a shortage of dollars, all assets dump. If dollars are print into economy, all assets are booming.

In  a way, I think it's good that BTC is not as independent of other economic factors like stocks (as I talked about yesterday also) or US dollar performance. So if US govt defaults (trust me it won't), BTC will crash badly like everything else.

That means to me that BTC is important to the same investors and same users of stocks and dollars and everything else. Unlike before when only nerds were using BTC

Doesn't that prove mainstream adoption?

Well, in my opinion ... people invested in US Bonds will look for other "Safe" investments ... because the US government will default on paying interest on US Bonds. (Bitcoin is seen as a store of value by many people, so they might consider increasing their investments into Bitcoin)

That said... a lot of people will transfer their wealth into Gold and Silver too, because that is also seen as a "Store of Value" ....even though I am not sure that Gold and Silver are such a good investment ..with the uncertainty of the amount of Gold that are stored in vaults. 

It is not entirely clear if Bitcoin and other cryptocurrencies could completely replace the US dollar or other currencies in the event of a financial default. Some argue that Bitcoin and other cryptocurrencies could become a more stable store of value compared to traditional currencies, as they are not tied to decisions made by central financial institutions. However, there are also doubts about the ability of cryptocurrencies to function as a medium of exchange and unit of account, as their volatility and lack of widespread acceptance in everyday use may make it difficult for businesses and consumers to use them as a primary currency.
In the event of a US dollar financial default, there is likely to be a significant economic and financial uncertainty and the reaction of cryptocurrencies will depend on the decisions of investors and actions of regulatory institutions. However, it is important to note that Bitcoin and other cryptocurrencies are not a panacea for all financial problems and also carry risks

There is not going to be a US government default because they have it as easy as continuing to print. If I owe you a million dollars and I see that I can't pay you back, I print a lot more notes (or create them as bits in the system) and then I can pay you back, even though you have easily lost money on net because the dollars I pay you back with now have less purchasing power than the dollars you lent me.

Even if there is a rate hike and a tightening, the debt keeps growing, let's see:

https://www.usdebtclock.org/

There are always arguments about the debt ceiling but politicians always come to an agreement in the end.

So, for me the question is not so much what would happen if the US defaulted on its debt, but what will happen in the face of this inevitable increase in debt that tends to infinity. And the answer for me is that bitcoin will become more and more valuable. It is not so noticeable now because of the tightening, but wait until they are forced to change their interest rate policy, because they are going to be forced to do so and watch how much of the money that is printed ends up in bitcoin.

Bitcoin not cryptos.

They do but what you are missing is the recession part. When you say "value [of fiat] dropping", that's inflation and that leads to more bitcoin adoption and its price going up.
But when we have recession, people tend to sell everything they have to get some money to spend and cover their cost of living. Hence bitcoin price dropping due to increased sell pressure.

We have to see how that affects the economy on a large scale. AFAIK this has never happened before so we have nothing to speculate this based on.
I believe the default would lead to increased interest rates and a massive recession which could cause a bitcoin drop but at the same time that would be US economy falling apart and people would also look for an exit of the failing economy and this could translate into more investment into bitcoin instead which could lead to the biggest price rise in bitcoin history.

P.S. Another thing to keep an eye on is "when". The world order is changing and the world is decoupling itself from US economy to some extent. In a couple of years it won't matter as much as it does today or it mattered a couple of years ago if US economy falls apart. That means the effects on bitcoin (which is global) would be a lot smaller.
P.P.S. In any case The effects will be short term, in long term bitcoin will become more valuable as it is the only "money" that exists in a world filled with uncapped "currencies".

My limited knowledge leads me to believe that BTC is truly independent of the U.S. dollar, and of all the U.S. markets.  However, watching the value of BTC, and indeed pretty much all of the crypto currencies, it appears they are very strongly influenced by markets.

Indeed, I often think that cryptos should move in opposition to U.S. markets and fiat currencies.  If something makes the market weak, resulting in a drop in values, the cryptos should hold their own and even go up.  Obviously my thoughts don’t reflect the real world.

So,…, what do you think BTC, and cryptos in general, will do in the event of a U.S. government default?