US Debt Default: Good or bad for crypto?

[Uruhara]

If the US defaults on debt then I read that it could trigger more increase in the number of unemployed there. I don't remember what points became the background until I got there. But the point is defaulting on debt means that the economic conditions there are really at the worst level at that time. Even if the economic conditions in a country are bad, all investment assets such as stocks and crypto there will be strongly affected. and Bitcoin too. will definitely be affected and have a fairly sharp decline. but it won't last long because even though the US is in bad condition but I actually see the Asian market is currently excited and has an extraordinary positive increase. be it in crypto or in any other way. so Bitcoin will correct and then bounce back because the buy demand level from Asia will be very strong.

[Abiky]

It is good and bad at the same time.
It is bad because in the case of an actual default by the government of the United States, there is no way the local and the global markets will stay unchanged to such unprecedented news, so I would expect the price of Bitcoin and other crypto currencies to go down in the short term.

On the other hand, those who were a bit skeptical on Bitcoin and decentralization may start to see why such things are important, in the current economy, Bitcoin cannot default because it is a networks about debit and those network which allow debt through smarth contracts mostly work on over-collateral and not on printing money out no where.

Prices will inevitably dip because they are tied to the USD. But knowing that BTC is deflationary by design, the effects will be shortlived. I think a US default would be a huge opportunity for investors to buy crypto at a discount. The majority of the people will think crypto is dying because of their inexperience in the industry. But crypto veterans like myself know there's more to crypto than "meets the eye".

Whenever the US raises the debt ceiling or not, we cannot deny that the American economy is in a very bad shape. It could be in a point where there's no room for recovery. With the de-dollarization process already in effect, we can expect anything in the future. Maybe this will serve as a cataclysm for crypto to reach new ATHs? I wouldn't be surprised if BTC goes to $1m because of this. We cannot predict the future, so let's hope for the best. Just my thoughts

[tygeade]

Not an expert on this matter but based on the opinions of the good finance experts that I happen to watch, they're suggesting people to keep off their hands to any asset that's pegged to USD. And they're suggesting people to buy real estate, gold, silver and even Bitcoin. All of them are telling the same thing and that's the US dollars collapsing. But we will never know until we finally get into that part that they've already defaulted. What we're going to see next? Another printing saga? Possible and if that happens, that's gonna be good for crypto but not on them and again, a domino effect to the world's economy which will increase inflation again. However, we've been used to these inflation hikes.

I think that's not really a shocking news, that's not really something you need smart people to tell you neither, its a very simple calculation. USA has high debt, they are discussing making it higher, the higher the debt they have, the less value it is, plus that means they can print more money, the more dollar you print the less value it has. Combine these two together now, and you have a lot less valued dollar and that would be very easy to see, from a mile away.

I believe that dollar will be much less valued very soon and that will not be a big deal, it will be fine because it keeps losing value but at the same time other fiat currencies lose value to, haven't ruble already did? What about sterlin, hell even Euro did. So, it is not really that much of a big deal for dollar to lose value neither.

[Hispo]

What do you think? Is a US default good or bad for crypto in the short term? Your input will be greatly appreciated. Thank you.

I think that in the event of a default, in the short term, the price of bitcoin will fall into an area of increased turbulence due to a head-on collision of two strong trends - on the one hand, the price will drop sharply, because bitcoin belongs to the class of high-risk financial assets, on the other hand, the price will rise sharply, because that the network hashrate is stable, blocks continue to be mined at intervals of an average of every ten minutes, and a fall in the dollar automatically means an increase in bitcoin in the btc/usd pair.

I agree, perhaps a flash crash is possible, with an immediate or not so immediate pump due to fluctuating exchange rates. Just want to add that any failure of any FIAT is positive for Bitcoin in the long run. 

The ideal scenario for Bitcoin, in my opinion, would not be a sudden failure of the FIAT system but rather a steady immigration of the population to more decentralized alternatives, as they realize the disadvantages FIAT can have in comparison to trustless systems like Bitcoin.

Weirdly enough, as the market works nowadays most of the liquidity of Bitcoin comes from the USD and USD pegged tokens.

Leaving that to one side, I still have the hope Republicans won't leave their markets to suffer over spending arguments, sounds contrary to what they are supposed to stand for...

[cabron]

What do you think? Is a US default good or bad for crypto in the short term? Your input will be greatly appreciated. Thank you.

I think that in the event of a default, in the short term, the price of bitcoin will fall into an area of increased turbulence due to a head-on collision of two strong trends - on the one hand, the price will drop sharply, because bitcoin belongs to the class of high-risk financial assets, on the other hand, the price will rise sharply, because that the network hashrate is stable, blocks continue to be mined at intervals of an average of every ten minutes, and a fall in the dollar automatically means an increase in bitcoin in the btc/usd pair.

I agree, perhaps a flash crash is possible, with an immediate or not so immediate pump due to fluctuating exchange rates. Just want to add that any failure of any FIAT is positive for Bitcoin in the long run. 

The ideal scenario for Bitcoin, in my opinion, would not be a sudden failure of the FIAT system but rather a steady immigration of the population to more decentralized alternatives, as they realize the disadvantages FIAT can have in comparison to trustless systems like Bitcoin.

Weird enough, as the market works nowadays most of the liquidity of Bitcoin comes from the USD and USD pegged tokens.

Leaving that to one side, I still have the hope Republicans won't leave their markets to suffer over spending arguments, sounds contrary to what they are supposed to stand for...

Debt default is drawing closer and if there is no raising of debt ceiling yet from both parties, then both have two different decisions. A chaotic market ahead.

Bitcoin is now political. News flows by where DeSantis and RFK is into Bitcoin and have BTC to be their tool to in election. BTC is linked to popularity already and a presidential candidate who protcts BTC might win the BItcoiners.

[DanWalker]

It is good and bad at the same time.
It is bad because in the case of an actual default by the government of the United States, there is no way the local and the global markets will stay unchanged to such unprecedented news, so I would expect the price of Bitcoin and other crypto currencies to go down in the short term.

On the other hand, those who were a bit skeptical on Bitcoin and decentralization may start to see why such things are important, in the current economy, Bitcoin cannot default because it is a networks about debit and those network which allow debt through smarth contracts mostly work on over-collateral and not on printing money out no where.

 ~snip~

Whenever the US raises the debt ceiling or not, we cannot deny that the American economy is in a very bad shape. It could be in a point where there's no room for recovery. With the de-dollarization process already in effect, we can expect anything in the future. Maybe this will serve as a cataclysm for crypto to reach new ATHs? I wouldn't be surprised if BTC goes to $1m because of this. We cannot predict the future, so let's hope for the best. Just my thoughts

I agree that the US economy is also in bad shape, but if we say they will default or the USD will lose its lead, I don't think that will happen anytime soon. They are still the country that holds the world's money printing machine, so it is impossible for them to collapse, or someone will replace them. The process of de-dollarization of the BRICS countries is just the beginning, nothing can be confirmed at this point. And don't forget, with the 2008 economic crisis, things were also terrible, and they got through it all, I don't think they will fail this time.

So can't expect bitcoin to benefit or have a chance to rise to $1 million because of this, that's too vague and far-fetched to think about.

[pooya87]

Technically if US regime defaults on its debt it would crash US economy and the dollar. Which means technically bitcoin price should shoot up to the moon in a very short time.

However, in reality there has been a huge amount of market manipulation and propaganda against bitcoin that over the past couple of years (mostly since 2020) has been trying to convince people that whenever US market dump, then bitcoin should dump too. That means there is a good chance that when the US markets and US dollar dumps, so would bitcoin.

In long term on the other hand, I'd say bitcoin price will soar because of the severe economic problems United States is facing and how the dollar has been getting dumped as reserve currency.

[Hispo]

It is good and bad at the same time.
It is bad because in the case of an actual default by the government of the United States, there is no way the local and the global markets will stay unchanged to such unprecedented news, so I would expect the price of Bitcoin and other crypto currencies to go down in the short term.

On the other hand, those who were a bit skeptical on Bitcoin and decentralization may start to see why such things are important, in the current economy, Bitcoin cannot default because it is a networks about debit and those network which allow debt through smarth contracts mostly work on over-collateral and not on printing money out no where.

 ~snip~

Whenever the US raises the debt ceiling or not, we cannot deny that the American economy is in a very bad shape. It could be in a point where there's no room for recovery. With the de-dollarization process already in effect, we can expect anything in the future. Maybe this will serve as a cataclysm for crypto to reach new ATHs? I wouldn't be surprised if BTC goes to $1m because of this. We cannot predict the future, so let's hope for the best. Just my thoughts

I agree that the US economy is also in bad shape, but if we say they will default or the USD will lose its lead, I don't think that will happen anytime soon. They are still the country that holds the world's money printing machine, so it is impossible for them to collapse, or someone will replace them. The process of de-dollarization of the BRICS countries is just the beginning, nothing can be confirmed at this point. And don't forget, with the 2008 economic crisis, things were also terrible, and they got through it all, I don't think they will fail this time.

So can't expect bitcoin to benefit or have a chance to rise to $1 million because of this, that's too vague and far-fetched to think about.

Even thought that I am almost sure the United States won't default and will manage to get out of this sticky situation, I cannot blame reporters or economists for thinking otherwise: the quality, personality and even motivations of the Leaders have changed much in comparison to what we see during the crisis of 2008.

We could argue that back then, politicians we more sober and less focused in the cult of personality of the party. Now Politicians are putting party over nation, otherwise, this debt ceiling debate would not exist, and they would try to adjust the spending during the next time the debate on the budget of the nation was due

[DrBeer]

I am not sure that any problems with the US domestic debt (under any scenario) will positively affect bitcoin. The problem is that cryptocurrencies have recently lost their mega investment attractiveness for the masses, plus, it turned out that the crypt is not a "safe haven" where you can survive the "financial storm" and not lose your savings.
  What is highly likely to rise in price is gold.

[safar1980]

A lot of noise about the upcoming default. Usually default or devaluation is done as in the video. The President reassures people, says that nothing will happen, and then they declare a default

There will be no default 1998. President of Russia Boris Nikolayevich Yeltsin
https://www.youtube.com/watch?v=GuGShb88xJQ

And in the United States, on the contrary, they scare people with a default, which means that it probably will not happen.

[panganib999]

As with crises of economy, just like what happened during 2020, it could safely be inferred that in the event a recession comes in no thanks to the US defaulting on its debt, there'd be a brief period of chaos in the bitcoin industry as people scramble away to find money from wherever they could. And then once the dust has settled and the fog is cleared, people will come back into bitcoin investing onto it and maybe even have bitcoin be put in a pretty nice situation once again just like what happened during 2020.

In any case, I wouldn't want to find out how it goes even though the clearest answer is that we may have to suffer another economic collapse in our lifetimes, and so I guess I'll just have to wing it lmao. Hopefully bitcoin bounces back because it definitely will drop in value due to the amount of people taking their money out for stuff that they would need, it's all just a matter of how long would we have to suffer that.

[MoonOfLife]

A lot of noise about the upcoming default. Usually default or devaluation is done as in the video. The President reassures people, says that nothing will happen, and then they declare a default

There will be no default 1998. President of Russia Boris Nikolayevich Yeltsin
https://www.youtube.com/watch?v=GuGShb88xJQ

And in the United States, on the contrary, they scare people with a default, which means that it probably will not happen.

The noise from the US government default is just a competition of politicians, they have the dirtiest politics in the world. The parties will be ready to do whatever it takes to make the other party lose influence and people's trust. We won't know anything, and what we read in the newspapers is most likely just politicians' manipulation of mob mentality. The US government is the one holding all the highest power of the world economy, their default will be very unlikely.

[Captain Corporate]

It is always the same scenario, whoever is in charge when needs a ceiling increase will ask the other party to help them, the other party won't, and they will negotiate something. Just recently there was a video of Trump saying they need to increase the ceiling and that there is no need for negotiating, it is a must and everyone should approve it. This shows two things, first of all democrats who wanted something in return when Trump wanted to increase it, and secondly, Republicans who didn't want to negotiate back then wanted it now. So as you can see it is a ruthless cycle where every party gets what they want, and they raise it just enough that the other party will need it again later on. No way to get out of it, it's a cycle that will keep on happening.

[DanWalker]

I am not sure that any problems with the US domestic debt (under any scenario) will positively affect bitcoin. The problem is that cryptocurrencies have recently lost their mega investment attractiveness for the masses, plus, it turned out that the crypt is not a "safe haven" where you can survive the "financial storm" and not lose your savings.
  What is highly likely to rise in price is gold.

If you believe in bitcoin's deflationary nature, then a US government default will have a positive impact on bitcoin. Because people will quickly look to other safe havens like metals and deflationary assets, and bitcoin will likely be of interest as well.

I don't see any news or evidence that crypto is losing traction, it's still getting a lot of attention from the community, it's just that during the bear season, you won't see much positive news.
Given bitcoin's volatility, it's more suited to be a speculative asset than a purely safe haven, but if the US government defaults and the world economy falls into chaos, then it will become a safe haven.

[YUriy1991]

The only event that will be able to make mass adoptions for cryptocurrency is the collapse of banks in the United States. And this can only happen as a result of a default or an increase in rates by the Fed. About the default, I do not believe. This is another political struggle, and the US still has the opportunity to pay its obligations for many years.

I don't think many people believe this. What if this is the plan, to do something no one believes in? Simply raising the debt ceiling again is predictable, boring and not a solution to the problem, it seems that the period of increased rates promises to drag on and in such conditions it becomes too expensive to even service the debt, not to mention the possibility of starting to pay off the body of the debt itself. In just one day, May 15, the US government spent nearly $51 billion on interest on the debt. In the end it's not a matter of faith and the crowd is always wrong.

If the concept raising the debt ceiling again is seen as a concrete step to reduce the budget deficit and as a solution, I think this will have serious economic consequences and the negative impact will be reborn. First, investors will lose confidence in the government and reduce their investment. Second, inflation and currency depreciation and lastly continued dependence on foreign creditors to finance budget deficits ultimately impacts economic and policy sovereignty in the long term.

[Russlenat]

Based on personal opinion, of course, a negative impact in more than 1 month will be seen in all investment assets including crypto. However, when viewed from a momentum standpoint, the impact is also a reversal of profits i.e. maximizing accumulation in Bitcoin. As this time approaches the halving, people will be taking much bigger risks even if the market conditions are unfavorable. They will not waste this opportunity by increasing the amount of their investment assets. After all, US economists have a huge influence on price spikes and falls. And after passing through the national debt phase, the surge will continue to increase the purchase value which is very significant.

Yes, it will create negative impact at the start but I think as years pass by, crypto will eventually get used to it and will never be affected. And people will eventually shift their focus into bitcoin and maximize their accumulation as much as they can. So in the long run, I guess this one is beneficial for crypto. But it also takes some risk before majority will start liking and dare to trust and invest into bitcoin.

[Hispo]

To be honest with all of you, I am not sure how the super power of the world ended up in such situation where they are expected to sell debt to the infinity in order to keep the country afloat... is this a normal thing in developed countries or this just happens in the United States?

I know that developing countries would never be able to sell debt like American does, because investors do not trust those countries as much as USA.

Also, if anyone is wondering what the 1 Trillion dollar coin plan, to avoid default is. You can check it out here:

The trillion-dollar coin scheme, explained by the guy who invented it

Source: https://www.vox.com/22711346/trillion-dollar-coin-mintthecoin-debt-ceiling-beowulf

The debt ceiling standoff is getting very real, very quickly. On Friday, the Congressional Budget Office warned that the federal government could run out of cash within the first two weeks of June. While the Treasury Department has been using extraordinary measures since January to keep paying US debt, officials there have said those measures could be exhausted by June 1, potentially setting up the US for a catastrophic default later this summer.

[Uruhara]

Based on the latest news it looks like America will avoid defaulting on debt. Because from the news I've read, the President (Biden) has met with the chairman of the House of Representatives, Kevin McCarthy, and has made an agreement or reached an agreement to raise the Federal government's debt limit, which is up to $ 31.4 trillion dollars.

And with this agreement formed, America will be prevented from failing to pay its debts.

------------
Sourch/Reference : https://www.livemint.com/news/world/biden-and-mccarthy-reach-bipartisan-agreement-on-debt-ceiling-report/amp-11685233998757.html

[Swordsoffreedom]

Based on the latest news it looks like America will avoid defaulting on debt. Because from the news I've read, the President (Biden) has met with the chairman of the House of Representatives, Kevin McCarthy, and has made an agreement or reached an agreement to raise the Federal government's debt limit, which is up to $ 31.4 trillion dollars.

And with this agreement formed, America will be prevented from failing to pay its debts.

------------
Sourch/Reference : https://www.livemint.com/news/world/biden-and-mccarthy-reach-bipartisan-agreement-on-debt-ceiling-report/amp-11685233998757.html

As always, what we are discussing and fearing is just a play by them or the media that has manipulated us all. This is not the first time they have reached an agreement to help the government avoid default. I don't know if the information I know is accurate, but someone told me that news of the US government's default has been repeated almost 80 times over the past century. I'm not sure about the number 80, but news of the US government default has spread steadily in recent years and has become all too familiar to all of us  .

[Uruhara]

Based on the latest news it looks like America will avoid defaulting on debt. Because from the news I've read, the President (Biden) has met with the chairman of the House of Representatives, Kevin McCarthy, and has made an agreement or reached an agreement to raise the Federal government's debt limit, which is up to $ 31.4 trillion dollars.

And with this agreement formed, America will be prevented from failing to pay its debts.

------------
Sourch/Reference : https://www.livemint.com/news/world/biden-and-mccarthy-reach-bipartisan-agreement-on-debt-ceiling-report/amp-11685233998757.html

As always, what we are discussing and fearing is just a play by them or the media that has manipulated us all. This is not the first time they have reached an agreement to help the government avoid default. I don't know if the information I know is accurate, but someone told me that news of the US government's default has been repeated almost 80 times over the past century. I'm not sure about the number 80, but news of the US government default has spread steadily in recent years and has become all too familiar to all of us   .

Right mate.  
it seems we really have to familiarize ourselves with this.
Exactly what I also thought about this. Although I do not know what interest in it. but this is clearly quite influential on the outlook of the world economy. even the stock market and crypto are affected by news like this. but whatever it is I just hope the world economy gets better and actually I don't really care about this. I am more concerned with the fate of countries that are experiencing an ongoing crisis. but rarely do the media highlight them.