Analysis: Global debt continues to rise, Bitcoin benefits from the decline in fiat currency purchasing power

According to Forbes, Bitcoin approached $90,000 earlier this month. Meanwhile, global debt continues to rise, and the "currency depreciation trade" surrounding the decline in purchasing power of fiat currency has become one of the factors driving up assets like Bitcoin and gold.

Data from the Institute of International Finance shows that global debt increased by $10 trillion in the first half of this year, surpassing $365 trillion in total. The U.S. debt has exceeded $40 trillion, with annual interest payments rising to $1.27 trillion, surpassing defense and Medicare spending, and only lower than Social Security spending. The institute warns that as benchmark interest rates rise, interest costs will also increase.

Nic Puckrin, founder of Coin Bureau and cross-asset analyst, stated that the current environment is favorable for "currency depreciation assets" like Bitcoin and gold, which is part of the reason for Bitcoin's recent rise. The larger the debt of major economies, the more likely it is to suppress real borrowing costs and allow inflation to erode the real value of debt, thereby enhancing the attractiveness of such trades.

Analysts from The Kobeissi Letter pointed out that the purchasing power of the dollar has declined by 23% since 2020; if assets only increased by 30% during the same period, investors have essentially just broken even in terms of real purchasing power. The U.S. inflation rate has been above the Federal Reserve's 2% target for 60 consecutive months.