U.S. Debt Ceiling Drama to Underscore the Case for Bitcoin: deVere Group

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The prospect of a U.S. debt default provides a compelling case for Bitcoin, says the CEO and founder of one of the world's largest independent financial advisory firms.

Nigel Green of deVere Group says the debt ceiling drama "further strengthens the compelling case for Bitcoin... as the gridlock in Washington DC intensifies over the dollar debt ceiling, it seems inevitable that a growing number of retail and institutional investors will want to circumnavigate the shenanigans and look to alternatives which are outside of political controls".

The call comes as Treasury Secretary Janet Yellen said in a letter to Congress that the agency will be unlikely to meet all U.S. government payment obligations "potentially as early as June 1" without action by Congress.

President Joe Biden on Monday summoned the four top congressional leaders to the White House later this week after Yellen's warning.

The debt ceiling is the amount of money the U.S. is able to borrow to pay its bills.

Since the cost of running the government is far greater than federal tax revenues, the U.S. must raise additional money by selling Treasury bonds – but it cannot do this after hitting the debt ceiling.

If the U.S. is unable to pay its bills, it will default on its debt. This would be the first time in U.S. history.

"This saga underscores that the U.S. dollar’s future trajectory is precarious and lies in the hands of opposing and increasingly divided politicians reaching difficult agreements," says Green.

He says Bitcoin is a credible alternative to the fiat hegemon as it is free of political risk and is digital, global and borderless.

"It’s a huge mess and it’s hitting the dollar’s credibility at a time when it already appears to be losing some of its global dominance – this is bullish for Bitcoin," says Green.

He says although the debt ceiling is likely to be raised in the end, the government might find it hard to attract buyers, forcing the Federal Reserve back into Quantitative Easing (QE) – or money printing.

"QE is typically good for riskier assets such as Bitcoin – as we saw during the last stimulus round – and it will also likely further hit the long-term value of the dollar, providing a boost for the cryptocurrency," says Green.