Crypto analyst Will Clemente recently took to social media platform X to share an in-depth analysis of why he remains bullish on Bitcoin despite its nearly 70% drop from 2021 highs.
He began by acknowledging Bitcoin’s origins, stating that it was created in the wake of the 2008 financial crisis. Satoshi Nakamoto, Bitcoin’s anonymous creator, foresaw that central bank policies would lead to a continuous money supply expansion. Clemente emphasized that over the past 15 years, the U.S. federal debt has ballooned from 60% of GDP to a staggering 120%.
Clemente dissected the options available to the U.S. to manage its escalating debt. He explained that the country could either accelerate its economic growth to outpace debt creation or reduce the rate at which debt is accumulated. However, he pointed out that neither seems likely. He cited recent economic data, noting that while the U.S. economy grew at an annualized rate of 2.4% in the second quarter, public debt increased at an annualized rate of 10.8%. This, he argued, would require nothing short of a miraculous economic transformation to rectify.
Adding another layer to the economic complexity, Clemente discussed the U.S.’s demographic challenges, particularly the aging baby boomer population. He explained that the social security programs these individuals rely on would have to be funded by a younger, smaller, and economically disadvantaged workforce. This demographic shift, he argued, further increases the likelihood of a rising debt-to-GDP ratio.
To manage this burgeoning debt, Clemente suggested that the U.S. would likely resort to monetary debasement, a strategy involving issuing more monetary units to service debt. He described this approach as akin to a Ponzi scheme, where new debt is created to pay off existing obligations. This strategy, while effective in nominal terms, fails to address the debt in real terms, leading to a devaluation of the currency.
When it comes to asset performance in such an economic landscape, Clemente identified Bitcoin as the standout choice. He compared it to traditional assets like stocks, real estate, and commodities, highlighting Bitcoin’s unique attributes, such as scarcity, utility, and monetary properties. He noted that after the next Bitcoin halving event, the cryptocurrency would surpass even gold and silver in terms of its stock-to-flow ratio.
Clemente also looked at global trends, citing a United Nations report that showed a surge in negative news and a decline in the global human development index. He linked these trends to a growing public distrust in governments and traditional financial systems. He argued that these shifts in global sentiment, coupled with the effects of monetary debasement, are creating a fertile ground for the mass adoption of alternative monetary systems like Bitcoin.
In his concluding thoughts, Clemente reiterated that the confluence of rising debt, demographic changes, and the ongoing digital transformation of the world makes Bitcoin an increasingly attractive asset. He summed up his long-term view by stating that over a decade or more, Bitcoin presents a promising investment opportunity.
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