Bitcoin: Trump’s unconventional plan to erase $35t debt

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As a seasoned researcher with over two decades of experience in financial markets and technology, I find Donald Trump’s proposal to use Bitcoin to pay off the United States’ debt intriguing, albeit highly improbable at this moment.

Previously elected U.S. President, Donald Trump, proposed employing Bitcoin as a means to tackle the country’s staggering $35 trillion national debt.

The amount of money owed by the United States as national debt keeps increasing, and one daring proposal from the Republican candidate for president aims to tackle this problem: Sending Bitcoin (BTC) to China as a means to pay off U.S. debts.

As someone who has spent years in the financial industry, I can attest to the intrigue surrounding cryptocurrencies like Bitcoin. Their high-level complexity and potential for massive returns have caught the attention of many investors, myself included. However, as a nation, we cannot afford to ignore the growing interest and involvement of other countries, particularly China, in this space.

This bold proposal will spark widespread discussion in the crypto space, but the feasibility of using crypto to mitigate the country’s financial debt does not come without its set of challenges.

Currently, the U.S. government owns approximately 210,392 Bitcoins, valued at around $13.3 billion. This places the United States among the top-tier nations with significant Bitcoin holdings.

At the time of writing, Bitcoin is trading near $63,000. 

Trump math: How the United States can pay off its debt with Bitcoin

Believe it or not, in a perfect world where price predictions are met, Trump may be onto something. Here are some recent Bitcoin price targets by major financial institutions: 

Fundstrat Global Advisors predicts that the price of Bitcoin could soar to approximately $180,000 by the close of 2024, mainly due to an increase in the use of a Bitcoin Exchange-Traded Fund (ETF). Lately, Standard Chartered Bank has raised its end-of-2024 forecast from $100,000 to $120,000, attributing this change to growing institutional investment and advantageous market circumstances.

Bernstein, a company managing over $750 billion in assets, strongly stands by its earlier prediction about Bitcoin’s price and has increased its 2025 projection from $150,000 to $200,000. Meanwhile, ARK Invest foresees a long-term price of $600,000 by 2030, highlighting Bitcoin as a valuable protection against inflation and a means for storing wealth. Fidelity has made headlines with its prediction that Bitcoin could potentially reach $1 billion by 2038.

Approximately 555 million Bitcoins are needed at the present Bitcoin price to cover the U.S. national debt.

​​At $180,000 per Bitcoin, the United States would need 194,444,000 Bitcoin. 

At $280,000 per Bitcoin, the United States would need 125,000,000 Bitcoin.

At $600,000 per Bitcoin, the United States would need 58,333,000 Bitcoin.

At $1,000,000 per Bitcoin, the United States would need only 35,000,000 Bitcoin. 

If Fidelity’s forecast on Bitcoin’s price proves accurate and Bitcoin hits $1 billion by 2038, then the United States would require just 35,000 Bitcoins.

Employing Bitcoin as a means to eliminate national debts sounds fascinating, but its feasibility is questionable due to numerous economic and operational hurdles that must be overcome.

When dealing with Bitcoin, it’s crucial to take into account its fluctuating value, changing regulatory landscape, and high trading activity. Notably, Genesis Trading has recently started offloading its Bitcoins to pay off debts, leading to a substantial sell-off in the market. However, due to the fact that there will only ever be 21 million Bitcoins, many of the situations mentioned above might not accurately reflect realistic scenarios.

At present, Trump’s claim that a minimal quantity of Bitcoin could erase all US debt appears to be premature. However, should the U.S. persist in acquiring and accumulating Bitcoin as its value escalates, it is conceivable that the nation could become debt-free or significantly reduce its colossal multi-trillion dollar debt burden.

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2024-08-03 01:16