TechFlow reported, citing Coindesk, that the Bank for International Settlements (BIS) warned in its annual report of the risk of a sharp decline in market confidence among highly indebted countries, urging central banks not to ease monetary policy too soon. The BIS noted that if economic momentum weakens and emergency public spending becomes necessary, market confidence could collapse rapidly. While the BIS did not name specific countries, the warning comes amid upcoming elections in several nations, where governments typically increase spending to win voter support.
Some cryptocurrency experts believe that Bitcoin and gold are already pricing in fiscal crises in the United States and other developed economies. This year, Bitcoin and gold have risen 48% and 13% respectively, driven largely by increased safe-haven demand. Although Bitcoin is seen as a hedge against fiat currency issues, it often falls alongside other risk assets during periods of stress. With public debt-to-GDP ratios surging globally since 2020, there is widespread market expectation that the Federal Reserve and other central banks will be forced to cut interest rates, prompting investors to shift more capital into alternative assets such as Bitcoin.
