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How Will Wiping US Student Debt Impact the Crypto Market?

2 mins
Updated by Kyle Baird
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In Brief

  • US President Joe Biden announces the cancellation of $127 billion student debt, affecting 3.6 million US citizens.
  • The move sparks debate on social media, with some speculating on potential positive impact on Bitcoin's price.
  • Debt forgiveness could enable individuals previously burdened to explore investment opportunities in crypto.
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United States President Joe Biden recently announced the cancelation of a substantial $127 billion student debt burden for approximately 3.6 million citizens in the United States.

The announcement received a varied response, with some speculating about crypto’s price. Meanwhile, others questioned the specific method behind the debt clearance.

US Government Canceling Student Debt Receives Mixed Response

On X (formerly Twitter), Biden’s announcement that the US Government has cleared student debt across the nation generated a flurry of responses. He reiterated that it was “a big deal.”

Prominent market commentator Mike Alfred shared with his 134,500 followers that this could potentially be a positive indicator for Bitcoin’s price.

“Yes because it ensures Bitcoin will appreciate.”

However, others were concerned about how it might affect the future coming years. One X user stated that it would be “more burden for taxpayers,” when another questioned the legitimacy of Biden’s statement:

“It isn’t ‘cancelled’ when the rest of us have to pay for it.”

Debt Forgiveness Potentially Boosts Crypto Investments

The debt forgiveness could potentially enable individuals who were previously burdened with debt to explore investment opportunities in crypto.

In January 2021, as the US Government distributed COVID-19 stimulus checks, the crypto market experienced a historic surge.

The total market capitalization of the market surpassed $1 trillion, and Bitcoin reached its all-time high of approximately $65,000 around the same period.

The $1.9 trillion stimulus package included $1,400 direct payments to citizens and provided crucial support to local authorities and businesses.

Although debt forgiveness and stimulus packages differ, they both ultimately lead to an increase in net worth.

At the time of publication, Bitcoin’s price stands at $27,961.

Bitcoin Price Chart 1 Month. Source: BeInCrypto
Bitcoin Price Chart 1 Month. Source: BeInCrypto

This comes amid the US national debt level reaching all-time highs.

On September 19, BeInCrypto reported that for the first time in history, total US Federal debt has exceeded $33 trillion. President of the Committee for a Responsible Federal Budget, Maya MacGuineas:

“The United States has hit a new milestone that no one will be proud of: our gross national debt just surpassed $33 trillion.”

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Ciaran Lyons
Ciaran is a cryptocurrency journalist based in Sydney, Australia. He particularly enjoys writing about CBDC developments and the practical implementations of cryptocurrency in real-world scenarios. He has also appeared across major television networks in Australia including Channel Ten, Channel Nine and SBS TV. Prior to his foray into cryptocurrency, Ciaran worked as a presenter on national radio station Triple J.
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