Max Keiser, the founder of cryptocurrency venture capital firm Heisenberg Capital, has pointed that bond prices are hitting an all-time high.
Adding that global debt has reached an all-time high of $184 trillion in nominal terms, Keiser claimed that once the bond bubble pops, it would wipe out $150 trillion from the market. He also suggests that the only solution for investors to safeguard themselves is to invest in cryptocurrencies such as Bitcoin.
— Max Keiser (@maxkeiser) August 12, 2019
Global Debt Hits at an All-Time High
According to data from the International Monetary Fund (IMF), the world’s debt now exceeds $86,000 in per capita terms and is over two and a half times the average income per capita. The data also lists out the top three most indebted economies, which are the US, China, and Japan. These three countries account for more than half of the global debt. Max Keiser suggested moving investments to Bitcoin since he believes that the cryptocurrency could be a safe-haven asset when the bond bubble bursts.
Debt in developing economies hit an all-time high as well, according to the data released by the International Institute of Finance (IIF). The combined debt of 30 large emerging economies rose to 216.4 percent of their GDPs, which amounts to around $69 trillion. The report says that the lower borrowing costs because of the monetary easing by central banks have encouraged countries to take on new debt.
Sonja Gibbs, the managing director for the global policy initiative at the IIF, said that since the rates went down, borrowing went up. She added that once debts get built up, they become hard to pay off without diverting funds from other goals such as welfare schemes.
Bitcoin: A Safe-Haven
On August 7, Bitcoin rose to over $12,000 for the second time in the week. Its price increase in 2019 has been attributed to traders that are seeking refuge from a potential global recession on the horizon. Other safe-haven assets like gold rose to its six-year high of $1,500.
Thomas Lee, a managing partner at Fundstrat Global Advisors, said that Bitcoin is mimicking a safe-haven asset because its correlation with other assets more linked to geopolitical news has diminished. He added that Bitcoin is now unaffected by the US dollar and more closely correlated with gold, which is a well known safe-haven asset for investors looking to shield themselves from market volatility.
Sky Gao, the CEO of blockchain platform Cypherium, said that since Bitcoin is decentralized and operated by a distributed network, its value will likely keep increasing as investor confidence decreases. Guo also said that since Bitcoin’s supply is impossible to manipulate, many are now treating it as a safe-haven asset. Even Goldman Sachs is on board, telling investors to go ahead and buy into the asset.
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