1. Bitcoin could end up benefiting from this situation.
2. The unwinding of the carry trade can lead to a drop in bonds and stocks in other countries.
How to face the monster?
The answer to this question is simple and straightforward: with bitcoin (BTC). Although the digital currency may suffer from the volatility of economic turbulence, it is an opportunity to demonstrate its strength as a safe-haven asset, just like gold.
The underlying problem in Japan is that if confidence in its debt continues to deteriorate, the government will have no choice but to finance itself through monetary issuance. That is, printing money to cover its fiscal commitments.
Although this type of measure may be a short-term solution to the fiscal problem, an injection of liquidity could accelerate the loss of confidence in the yen, especially in an inflationary environment. In this scenario, with more money in circulation without real backing, investors will seek refuge in a scarce asset like BTC. The more liquidity is injected into the global system, the more BTC benefits.
In the face of monetary expansion, excess money seeks limited assets, which ultimately drives up the price of BTC. And to reinforce this argument, it is worth remembering that BlackRock, the largest asset manager in the world, defined BTC as a 'unique diversifying asset.'
It is important to highlight that BTC does not depend on the decisions of governments or central banks. Additionally, unlike fiat money, the issuance of BTC is fixed at 21 million units, making it a more resilient store of value against inflation and economic uncertainty. This inherent scarcity is what is attracting the interest of governments and companies. It is a factor that influences its price in the medium and long term.
Thus, while the monster of Japanese debt roars and generates uncertainty in global markets, bitcoin gains ground and consolidates as a protective shield against the looming crisis.
Author: Martín Arrúa, reporter for CriptoNoticias
