In the past weeks, the Bitcoin bulls have shown great strength pushing BTC’s price back into the $50,0000. In the meantime, the members of the U.S. government have re-opened a pandora box in an attempt to elevate their debt ceiling: to mint a $1 trillion coin and prevent it from defaulting on their national debt.
As Peter St. Onge, a Ph.D. and economic research fellow at Heritage Foundation, explained in a post called “Trillion Dollar Coin: Rocket Fuel for Bitcoin”, the measure has been deferred at the expense of $480 billion taken from the American public, but BTC and its holder have already benefit.
As Onge pointed out, the U.S. government has been pushing the limit on their debt since several decades ago. In fact, it’s not the first time a government official has proposed to mint a $1 trillion coin and keep it on the U.S. Treasury balance sheet to elevate their debt ceiling.
In that sense, the researcher referred to the $1 trillion coin as a “gimmick to exploit a legal loophole”. The decision has been postponed at the moment, but the U.S. government could return to consider it if the economic situation worsens. Thus, making Bitcoin much stronger.
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The scenario where the U.S. decides to issue a $1 trillion coin could have devasting consequences for the global economy due to the status of the USD as the global reserve currency. Onge said the following on the chaos that could ensue:
(…) the end result of a trillion-dollar coin is radically higher money creation, radically higher government absorption of real resources from the private sector, and a federal government that has finally maxxed out the credit card once and for all. Bringing them at last face to face with the universe’s ultimate debt ceiling: the bond market.
How Bitcoin Has Benefit From The $1 Trillion Coin
The fact that the discussion to mint a $1 trillion coin is actually being considered by the U.S. government, is already a bullish factor for Bitcoin, the research claimed. BTC was created as a result of a financial crisis and a lack of trust in the central authorities that rule over the global monetary supply.
In that sense, Bitcoin operates as insurance, a way to opt-out of a system that seems to be trap in a “pattern of destroying the world every decade”, as Onge said. Inflation, one of the main problems that came out of the COVID-19, could be significantly worse if handle by other branches of the U.S. government. The research said:
(…) if you think central banks like printing money, just wait til you meet Congress. And, as corollary, if Bitcoin’s price likes the Fed’s money printers, wait til they meet a Treasury that shoots out trillion-dollar scrip for sport.
Ultimately, Onge rules out the possibility of a $1 trillion coin, but its symbol of inflation and lack of trust in the government stands. Thus, it becomes just another reason to hold Bitcoin.
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At the time of writing, BTC trades at $54,976 with a 1.3% profit in the daily chart.