Bitcoin Briefly Touches $110K After US National Debt Surpasses $38T

The figure also represents “the fastest accumulation of a trillion dollars in debt outside of the COVID-19 pandemic,” according to the Associated Press.

U.S. Debt Tops $38 Trillion, Bitcoin Tops $110,000

The U.S. national debt broke $38 trillion on Wednesday after what the Associated Press reported as “the fastest accumulation of a trillion dollars in debt outside of the COVID-19 pandemic.” The national debt stood at $37 trillion in mid-August, and in just two months, it jumped by $1 trillion. Bitcoin climbed to $110K on the news, seemingly buoyed by what may be a flight to safety as investors become increasingly wary of the governments fiscal condition. The cryptocurrency had eased to $109K by mid-morning Thursday.

The current government shutdown, now entering its 23rd day, has only exacerbated the situation. Senate Republicans and Democrats are still deadlocked over how to structure a temporary spending bill. Democrats want an extension of health insurance tax credits, but Republicans say its too costly.

With the government machinery compromised by the shutdown, federal workers miss their pay, national programs are halted, and key fiscal decisions are deferred. The result is a drop in economic activity, as seen in the 2018-19 shutdown where $3 billion in gross domestic product (GDP) was lost, according to the Congressional Budget Office. All of these downstream effects may cause an even faster acceleration to $39 trillion if nothing changes.

“The US is broke. The real debt is $175T+,” said Balaji Srinivasan, author and former Coinbase chief technology officer. “There is no fix. Its a writeoff. A national bankruptcy.”

Overview of Market Metrics

Bitcoin was priced at $109,158.01 at the time of reporting, up 1.01% for the day but still lower by 2.14% on a weekly basis, Coinmarketcap data shows. Intraday price action ranged from $106,778.00 to $110,295.02.

( BTC price Trading View)

Twenty-four-hour trading volume fell 32.87% to $70 billion, but market capitalization, which moves with price, rose 1% to $2.17 trillion. Bitcoin dominance was mostly flat, dipping 0.01% over 24 hours to 59.87%.

( BTC dominance Trading View)

Total value of open futures contracts fell slightly by 0.66% to $68.96 billion over 24 hours, according to Coinglass. Liquidations started the day lower at $67.10 million, with a relatively even distribution of losses between shorts and longs. Short sellers bled $36.72 million, and long investors lost a slightly smaller $30.39 million.