U.S. Debt Metric Bolsters Bitcoin’s Long-Term Bull Case

The U.S. fiscal outlook is sharpening the investment case for scarce assets such as bitcoin and gold. The primary budget balance, which excludes interest payments on existing debt, offers a clearer measure of borrowing caused by current spending choices. Persistent deficits can erode confidence in sovereign assets and force investors to demand higher Treasury yields, potentially increasing demand for bitcoin as a hedge against fiscal deterioration and currency debasement.

Bloomberg data cited by The Kobeissi Letter showed on Aug. 31 that the U.S. primary budget deficit stood at 3.59% of gross domestic product, the largest among major advanced economies and above Japan’s. Robin Brooks, a Brookings Institution senior fellow and former Institute of International Finance chief economist, has warned that capital is shifting away from heavily indebted countries. Bitcoin gained 23% in August while gold rose 10%, though the Sept. 4 U.S. payrolls report and changing expectations for a Federal Reserve rate increase could drive further volatility.