German-Finnish Internet entrepreneur Kim Dotcom recently tweeted that he, along with many economists, predict that the US dollar will eventually collapse under the heavy national debt burden.

“The pyramid game is coming to an end,” writes Dotcom. “Crypto and precious metals will go up when everything else falls. I think it’s going to happen in the next two years.”

Kim Dotcom’s sentiments are echoed by Irwin M. Stelzer of the Hudson Institute, who told the Washington Post that if the US continues to rack up limitless debt and carelessly print trillions of dollars, the entire country may soon collapse.

“If unlimited borrowing, financed by printing money, were a path to prosperity, then Venezuela and Zimbabwe would be top of the growth tables,” writes Stelzer.

It’s terrifying to consider what a global economic disaster could lead to. Indeed, the end of fiat currency could be just as great a danger as nuclear war, ‘superbug’ epidemics and giant solar flares. A growing number of individuals, calling themselves preppers, have formed a movement dedicated to developing strategies for these types of ‘Shit Hits the Fan’ scenarios. One website, Primed Preppers, recommends a list of disaster supplies that includes an emergency cryptocurrency fund, in case fiat does collapse.

The US Debt is Now Over 21 Trillion Dollars—over 100 percent of the countries GDP

Traditionally, economic disasters have caused rapid influxes in the price of precious metals such as gold and silver. According to Kim Dotcom and other economists, cryptocurrency will see similar value increases should disaster ever strike first-world economies.

We are in some ways already seeing this scenario play out in places like Venezuela. Amidst a complete financial collapse, Venezuelans are now surviving through the adoption of cryptocurrency for use in daily transactions. Similarly, in Turkey, trading volume on Turkish cryptocurrency exchanges rose dramatically in August as the lira’s price plummeted.

These types of  ‘Shit Hit the Fan’ (SHTF) moments may be a long way off in places like the United States, but it’s important that developed countries not fall victim to hubris. As previously reported by Unhashed, experts at JPMorgan estimate that the likelihood of a potentially major recession arriving in the next two years is more than 60 percent—and over 80 percent in three years.

Vice President of Research and Development at Bitwise Asset Management Matt Hougan told Bloomberg in a recent interview that cryptocurrencies as an asset class rely on fundamental drivers that are different from the catalysts of the broader financial market. Hougan reports that institutional investors and large-scale retail traders are beginning to recognize cryptocurrencies as a legitimate store of value, because the entire asset class moves independently of the traditional financial sector and global economy. Therefore, in the event of an economic disaster, crypto, like gold and silver, could increase in value.

“Non-correlation is not the same as inverse correlation so there’s no guarantee that when the market goes down crypto will go up,” Hougan told Bloomberg. “Over the long term, we think the fundamental drivers of crypto are different from the fundamental driver of equities and other assets, and we would expect the low correlation to persist.”

Data from earlier this year published by the Federal Reserve Bank of New York’s Center of Microeconomic Data reports that US household debt has reached an all time high of $13 trillion. Meanwhile, mortgage debt, credit card debt and student loans have increased by 700 percent on average. The dollar value will remain strong as long as the US holds the power as a central authority, but economic instability could quickly put the dollar into steep decline. Data suggest that a growing number of individual and institutional investors are moving into gold and silver for this very reason. We might see this trend extend into cryptocurrency, especially now that more institutional investors are beginning to enter into the space.

The post What Happens to Crypto If the US Dollar Collapses? appeared first on UNHASHED.

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