Bitcoin (BTC) and other store of value assets will remain in high demand as the US government continues to overspend and keep interest rates high, according to Zach Pandl, the managing director of research at Grayscale. Pandl believes that persistent inflation and unsustainable budget deficits will contribute to the demand for assets like Bitcoin. He also argues that the Federal Reserve is unlikely to reduce interest rates due to the current high inflation. However, upcoming events like the Bitcoin halving, economic growth, and increased crypto adoption will fuel Bitcoin’s price. In March, inflation rose by 0.4% month-on-month and 3.5% year-over-year. This outcome has led many to share Pandl’s concerns about high inflation rates hindering the Fed’s ability to lower interest rates in the near future. Ernst & Young chief economist Greg Daco also believes that higher inflation rates put pressure on policymakers to sustain a higher-for-longer monetary policy stance. Despite this, Pandl believes that there will be continued demand for store-of-value assets in the long term. The recent increase in the real interest rate may be a catalyst for investors gravitating towards less volatile assets such as bonds and term deposits. In the past, major increases in the 10-year real interest rate have correlated with significant drops in Bitcoin’s price. However, Pandl remains optimistic about the long-term demand for store of value assets. Following the release of the most recent CPI information, Bitcoin experienced a minor downward shift in its price, reflecting investor sentiment. Bitcoin’s price dropped as much as 2.5% on April 10 but has since recovered to $70,640. Analysts have identified an ascending triangle formation on Bitcoin’s price chart, with a new resistance level above $71,500.
Bitcoin demand surges due to ‘unsustainable’ deficit and inflation, says Grayscale