BlackRock: $40 trillion US debt supports Bitcoin

The US national debt rose above $40 trillion on 18 August, a development that, according to BlackRock, is drawing an increasing number of investors towards Bitcoin. Robbie Mitchnick, head of digital assets at BlackRock, argues that this fiscal pressure is a greater driving force behind Bitcoin’s price rise than any crypto policy process. Bitcoin is currently at $79K, up 0.7% over the past 24 hours.

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In brief:

• BlackRock’s Robbie Mitchnick links Bitcoin’s rise to the US national debt, which has surpassed $40 trillion.
• Mitchnick says Bitcoin shows recovery when confidence in traditional markets declines.
• The impact of the CLARITY Act, he says, is smaller than that of fiscal risks on Bitcoin’s long-term value.

National debt as a driving force behind Bitcoin

Mitchnick says Bitcoin’s recent rise fits a pattern he has observed for years. According to him, Bitcoin recovers precisely when confidence in the broader financial markets comes under pressure. Moreover, in the long term, Bitcoin’s behaviour can diverge from that of equities and other traditional investments.

The federal debt of the United States reached approximately $40.05 trillion on 18 August. Mitchnick considers the persistent budget deficits and the growing debt burden structural risks that increasingly drive investors towards alternatives such as Bitcoin and gold. Long-term holders do appear to be selling somewhat around the $80.000 level, although that does little to change the broader picture Mitchnick outlines.

CLARITY Act less relevant than fiscal concerns

Mitchnick also tempers the expected impact of the CLARITY Act, the US legislation currently under consideration that aims to clarify crypto regulation. While the law does have consequences, particularly for sectors such as DeFi, he considers its effect on Bitcoin’s long-term valuation to be limited.

In his view, the fiscal sustainability of US public finances is the larger issue. Bitcoin ETFs, meanwhile, have seen inflows for seven consecutive days, indicating that institutional interest in Bitcoin as an alternative store of value is increasing further.