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 harmful alternatives of a complete default or severe austerity. (Other indebted nations like the United States, the United Kingdom, and European countries could soon follow suit.)
Such an environment creates a strong incentive to seek assets with limited supply that can preserve purchasing power, such as bitcoin and gold. BTC has already proven its worth: house prices measured in bitcoins appear 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 towards local assets can create jitters on Wall Street, potentially generating 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 renewed bullish shift in the market trend. There are several more key levels between $65,000 and $80,000 that prices must overcome before a full-blown uptrend is confirmed. Stay alert!
Read more: For an analysis of current activity in altcoins and derivatives, see Crypto Markets Today. For a complete list of this week’s events, check out CoinDesk’s “Crypto Week Ahead.”
