Grayscale predicts increased Bitcoin demand due to ‘unsustainable’ deficit and inflation.

Bitcoin (BTC) and other store of value assets are expected to remain in high demand due to persistent inflation and unsustainable budget deficits in the United States, according to Zach Pandl, the managing director of research at Grayscale. Pandl believes that the Federal Reserve is unlikely to reduce interest rates in light of the current high inflation. However, upcoming events such as the Bitcoin halving, as well as increased economic growth and crypto adoption, are expected to drive up the price of Bitcoin. In March, inflation rose by 0.4% month-on-month and 3.5% year-over-year. This has led to concerns that the Fed will be unable to lower interest rates in the near future. Pandl acknowledges that an increase in the real interest rate may have a short-term negative impact on crypto, but he believes that there will still be long-term demand for store-of-value assets. The recent surge in the 10-year real interest rate could prompt investors to shift towards less volatile assets such as bonds and term deposits. Historical data shows that when the 10-year real interest rate spiked in the past, there was a significant drop in Bitcoin’s price. Following the release of the most recent CPI information, Bitcoin experienced a minor downward shift in its price. However, it has since recovered and is currently priced at $70,640.