April 1, 2023

Investors are running from risk - gold and bitcoin decline

Over the past 12 months, the American stock market has grown by more than 30%, and government debt - from 108% to 126% from GDP.Large-scale support for the economy led to the fact that the US Treasury only had money until mid-October. If Congress does not allow borrowing in excess of the limit, the government will suspend work (shutdown regime), and in the event of an aggravation of the situation, it will declare a default.
Investors are running from risk - gold and bitcoin decline

Image source: usdebtclock.org

In a negative scenario, the federalthe government will have to go for unprecedented spending cuts, which, according to Moody’s estimates, will lead to the loss of 6 million jobs, an increase in unemployment to 9% and a fall in the stock market by 30%.

In 2020, institutional investors boughtBitcoin instead of gold to hedge against inflation. This time the situation is different - they get rid of risky assets in order to enter the cash. Hence the fall of most financial instruments, including cryptocurrencies.
Investors are running from risk - gold and bitcoin decline

Image Source: Cryptocurrency Exchange StormGain

At the moment, the Republicans are blocking the passage of the budget project in order to achieve a number of concessions from the Democrats. Treasury Secretary Janet Yellen set the deadline on October 18.

However, it should be borne in mind that for the United States, shutdowns andraising the public debt ceiling is common. So, over the past four years, the government has stopped its work three times, and since 1977 - 20 times. Each time, Congress has been able to flatten the corners to kickstart the economy to the next rise in debt levels.

Until a compromise is found, the markets will remain under pressure.

Analytical group StormGain

(platform for trading, exchanging and storing cryptocurrency)