When the US debt, the 'global financial anchor', begins to rust, opportunities and traps in the cryptocurrency sector are simultaneously exploding. This is not alarmism, but a warning fired collectively by three investment giants who have never simultaneously been bearish.
Let’s look at this set of signals that made me get up in the middle of the night to flip through data: Dalio from Bridgewater said that the $37 trillion US debt is an 'economic time bomb', and the government is living off borrowing new to pay old debts. If the Treasury market gets locked down in the next three years, ordinary people's mortgage rates could double overnight; Burry, the archetype of the big short, is even bolder, betting half his fortune against Nvidia. This company is the engine of the AI frenzy, accounting for 6.5% of the US stock market's value, and his move clearly bets on a 'tech bubble + US debt crisis' double explosion; Grantham, who predicted two crashes, bluntly stated that we are now in a 'super bubble of all assets'. In 2008, there was US debt as a safe haven, but this time there’s no place left to seek refuge.
As an analyst who has been watching the crypto market for ten years, I dare say this situation will impact the crypto sector more than the three FTX collapses combined.
The core logic is simple: when the 'safety net' of the fiat currency system, US debt, becomes a source of risk, decentralized cryptocurrencies will be repriced. The 2008 subprime crisis gave birth to Bitcoin, essentially a protest against the over-issuance of fiat currency; in 2020, the Federal Reserve's unlimited QE saw Bitcoin surge from $3,800 to $60,000, relying on the 'anti-inflation narrative'. But this time is different. If US debt collapses, it’s not just a simple inflation issue, but a shaking of the foundation of the global credit system.
At this time, the duality of cryptocurrencies will be fully exposed: on one side are mainstream coins like Bitcoin and Ethereum, which might be crazily bought due to their 'decentralized hedge' attributes, similar to how USDC rose when the pound collapsed in 2022; on the other side are those air coins riding the coattails of AI and metaverse concepts, which will go to zero alongside US tech stocks. Burry’s logic in shorting Nvidia applies equally to these coins.
Three hard suggestions for old fans: 1. Cut altcoins in your portfolio to below 30%, leaving enough Bitcoin and stablecoins as ammo; 2. Keep an eye on US Treasury yields; once they break 5%, the volatility in the crypto market will be even more exaggerated than during last year's FTX collapse; 3. Don’t believe the nonsense that 'cryptocurrencies can thrive independently', but also don’t forget that the players who emerged after 2008 were not traditional banks, but disruptive new players.
Finally, here’s a question: If US debt really can’t hold up for three years, do you think the first to reach $100,000 will be Bitcoin or some currently inconspicuous new coin? Let’s discuss your views in the comments, and tomorrow I will pick three of the most insightful opinions to elaborate on the underlying logic. Follow me, as we need to survive and profit together in this storm.
