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China’s potential approval of a considerable debt increase over the next three years could strengthen Bitcoin’s reputation as a safeguard against financial loss. Arthur Hayes of BitMEX suggests that such a move might encourage more Chinese traders to invest in Bitcoin. His theory is based on Bitcoin’s performance during previous situations of large national debt increases. Furthermore, analysts from Bitfinex predict a possible rally in Bitcoin’s value to $80,000 by 2025, partly fuelled by a potential Trump reelection. It should be noted, however, that this is not investment advice.

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Bitcoin’s reputation as a safe bet against money loss could be strengthened by China’s growing national debt. China could approve a new massive debt of over 10 trillion yuan ($1.4 trillion), depending on the potential reelection of Donald Trump. If approved, this debt would be raised over the next three years and help local governments manage their own debt.

This news could cause increased interest in Bitcoin among traders in China, says Arthur Hayes, co-founder of BitMEX. Hayes thinks this situation might offer a “great buying opportunity.” He pointed out that when ordinary folks decide they must have Bitcoin at any price, the surge in Bitcoin’s price will be like what it was back in August 2015.

Hayes’ theory came shortly after Bitcoin’s value exceeded $70,000 for the first time since June 10, mainly because of the upcoming US presidential elections.

Hayes’ predictions are somewhat based on Bitcoin’s price history during periods of large national debt increases and currency value decreases. For example, Bitcoin’s price saw a more than five-fold increase in 2015 when China’s central bank carried out three consecutive devaluations of their currency, causing it to lose over 3% of its value.

Well-known investors such as MicroStrategy’s Michael Saylor have described Bitcoin as the best safeguard against inflation and currency value loss.

Meanwhile, according to Aurelie Barthere, a principal research analyst at Nansen, Asian buyers have been a significant driver of Bitcoin’s price momentum. She said that it’s hard to say whether the price surge was due to China’s fiscal/debt announcement, the excitement around the US election, or Bitcoin’s positive trend. It’s probably a combination of these.

Analysts from Bitfinex also predict a Bitcoin rally to $80,000 before the end of 2025, motivated by the options market structure and the prospect of a Republican presidential victory. Trump’s victory in the upcoming US presidential election is generally seen as a positive development for risky assets like Bitcoin, which has been related to Trump’s increasing election odds.

Just remember, this article does not contain any form of investment advice or recommendations. Trading always carries risk, and you should do your own research before making a decision.

Source: Cointelegraph