Bitcoin Is Poised to Earn Its Reputation as a Type of Digital Gold — for Reasons That Are Bad for the US Economy

That's according to Zach Pandl, managing director of research at crypto asset management firm Grayscale Investments.

Cryptocurrency markets are set to explode in the next 10 to 20 years as the US dollar weakens, according to a top crypto executive.

That’s because Bitcoin is designed to hedge against monetary debasement, and the dollar is set to get really weak.

“There are long-running macro trends that will play out regardless of who takes the White House in November,” Zach Pandl, managing director of research at crypto asset management firm Grayscale Investments, told DL News, referring to the presidential race between Vice President Kamala Harris and former President Donald Trump.

“The dollar is set to weaken over the next 10 to 20 years, or even sooner, depending on the election and the new administration's monetary policy,” Pandl said, adding that the value of the dollar could depreciate over the next 10 to 20 years.

“If that happens, Bitcoin's value against the currency will go up in relative value, and investors will pile into the cryptocurrency.”

A former macroeconomics and markets strategist at Goldman Sachs, Pandl now heads research at Grayscale, which is known for its crypto exchange-traded funds and its role in bringing crypto to the masses.

His comments come as the US government debt nears a record high, and as the Federal Reserve continues to print trillions of dollars to stimulate the economy.

That monetary expansion has helped propel crypto prices to new highs in recent years, but it could also lead to a massive devaluation of the dollar.

If that happens, investors will likely flock to safe-haven assets like gold and Bitcoin, which is designed to be a hedge against monetary debasement.

“The government has been issuing debt in the form of Treasury bills for decades to finance its activities,” Pandl said.

“The dollar is the reserve currency of the world, so there is always demand for these bonds from countries like Japan and China.”

But that debt has now ballooned to almost $33.2 trillion — 123% more than the nation's gross domestic product, which was nearly $27 trillion in 2023.

The government has to keep issuing more debt just to pay the interest on the existing debt.

If this phenomenon continues, at some point demand won't be able to keep up with issuance.

The US government will then either default on its debt, or print more US dollars to buy the debt itself — which will cause an inflationary shock.

“Bitcoin became a trillion-dollar asset during a period in which the dollar was exceptionally strong,” Pandl said.

“Bitcoin benefits from this because its supply is limited to 21 million Bitcoin, which means it can never experience monetary debasement in the way that the dollar can.”

“Do you know what’s going to happen to this asset when we have a period of sustained dollar depreciation?” Pandl asked rhetorically, implying that Bitcoin will go to the proverbial moon.

Not everyone agrees that massive inflation is inevitable, nor that if it does happen, investors will see Bitcoin as a store of value on par with traditional safe assets like gold.

That's why Bitcoin is still controversial in a way that other cryptocurrencies like Ethereum aren't, Pandl said — Bitcoin is essentially a bet against the US dollar.

“Bitcoin was created as a direct response and rejection to the traditional financial system,” Pandl said.

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