Institutional investors are increasingly turning to cryptocurrency as a hedge against debasement amid the recent increase in the US national debt, according to a report by KPMG. The report highlights the growing interest in digital assets as a way to protect against the potential devaluation of traditional currencies.
The US national debt has been steadily increasing over the past few years, reaching a record high of over $28 trillion in 2021. This has raised concerns among investors about the long-term stability of the US dollar and other fiat currencies. In response, many institutional investors are looking to diversify their portfolios by investing in cryptocurrencies such as Bitcoin and Ethereum.
One of the main reasons why institutional investors are turning to crypto as a hedge against debasement is the decentralized nature of digital assets. Unlike traditional currencies, which are controlled by central banks and governments, cryptocurrencies operate on a peer-to-peer network that is not subject to government manipulation. This gives investors greater control over their assets and reduces the risk of inflation or currency devaluation.
Additionally, cryptocurrencies offer a level of transparency and security that is unmatched by traditional financial instruments. The use of blockchain technology ensures that transactions are secure and immutable, making it difficult for hackers or fraudsters to manipulate the system. This level of security is particularly appealing to institutional investors who are looking to protect their assets from cyber threats and other risks.
The KPMG report also highlights the potential for significant returns on investment in the crypto market. Despite its volatility, the value of cryptocurrencies has been steadily increasing over the past few years, with Bitcoin reaching an all-time high of over $60,000 in 2021. This has attracted the attention of institutional investors who are looking to capitalize on the potential for high returns in the digital asset space.
Overall, the report suggests that institutional investors are increasingly viewing cryptocurrency as a viable alternative to traditional financial instruments as a hedge against debasement. With the US national debt continuing to rise and concerns about inflation mounting, it is likely that more investors will turn to crypto as a way to protect their assets and potentially generate significant returns in the future.