Bitcoin in high demand due to ‘unsustainable’ deficit and inflation, says Grayscale

Bitcoin (BTC) and other store of value assets are expected to remain in high demand as the United States government continues to overspend and maintain high interest rates, according to Zach Pandl, the managing director of research at Grayscale. Pandl believes that persistent inflation and unsustainable budget deficits will contribute to the popularity of store of value assets like Bitcoin. While the Federal Reserve is unlikely to lower interest rates due to high inflation, upcoming events such as the Bitcoin halving, economic growth, and increased crypto adoption will drive Bitcoin’s price. The recent increase in inflation rates has put pressure on policymakers to maintain a higher-for-longer monetary policy stance. Although an increase in the real interest rate may have a short-term negative impact on crypto, Pandl predicts continued demand for store-of-value assets in the long term. It is worth noting that major monthly spikes in the 10-year real interest rate have historically led to significant drops in Bitcoin’s price. Following the release of the most recent Consumer Price Index (CPI) data, Bitcoin experienced a slight decrease in price. However, Bitcoin’s price has since recovered and is currently trading at $70,640. Analysts have identified an ascending triangle formation on Bitcoin’s price chart, with a new resistance level established above $71,500. Overall, there is optimism regarding the future of Bitcoin and store of value assets, despite short-term market fluctuations.