On the 14th of September, the US Federal Reserve ended up making quite a significant announcement, wherein they revealed the accumulated losses of $100 billion in 2023. The situation, as it turns out, is also expected to worsen for them, according to Reuters. But for other cryptocurrencies like Bitcoin, this could be the light at the end of the tunnel.
One of the main reasons behind such a financial setback is that the interest payments on the debt of the Feds have managed to go beyond the earnings that were generated from the holdings, as well as the services that it provided to the financial sector. Due to such a development, investors have now started scrambling to grasp how it will impact the interest rates and the demand for probably scarce assets like BTC.
Bitcoin Could Be Helped Through Fed Debt
Some analysts are of the opinion that the losses by the Feds, which took place a year ago, could double potentially by 2024. The central bank has, therefore, categorized the negative results as deferred assets- wherein they have argued that there is no current necessity to cover them. Throughout history, the Federal Reserve has been quite a profitable institution. However, the lack of profits would not, under any circumstance, hinder the ability of the bank to conduct monetary policy and achieve the objectives placed before it.
Now, while Bitcoin and other cryptocurrency options might not look like a viable hedge option, this perspective could end up shifting as investors would end up realizing that the government debt in the country was essentially boundless. Therefore, it might make a lot of sense to actually accumulate the assets regardless of the short-term price trends.