Elon Musk Supports Warning of $36 Trillion Inflation Impact by 2024, Predicting Bitcoin Price Decline

Elon Musk, the unpredictable billionaire whose interest in bitcoin has fluctuated since 2021, is stirring concerns about a potential $36 trillion crisis looming over the U.S. dollar.

The price of bitcoin has been highly volatile in recent weeks, surging to $65,000 before dropping to around $50,000 as a prominent bitcoin trader revised their price prediction unexpectedly.

As details about Donald Trump’s undisclosed crypto project emerge, Musk has endorsed a warning of a $36 trillion scenario by the end of 2024 due to escalating interest payments on the massive U.S. national debt.

Musk shared a post highlighting the soaring interest payments on the national debt, predicting a substantial increase to $36 trillion by the end of 2024. The post also forecasted over $1.2 trillion in interest payments within the next year, equivalent to a quarter of the government’s annual revenue.

Projections indicate that U.S. debt interest payments will reach $870 billion this year, driven by record inflation prompting the Federal Reserve to rapidly raise interest rates following extensive pandemic-related spending and money creation.

Bank of America analysts have warned that the U.S. debt burden is set to escalate, adding $1 trillion every 100 days, potentially fueling a surge in bitcoin prices.

The Federal Reserve is anticipated to initiate a cycle of interest rate cuts, with market expectations leaning towards a rate reduction during the upcoming meeting in September. This move, along with the Fed’s outlook for the remainder of 2024, is likely to introduce volatility to the bitcoin price, the broader crypto market, and various risk assets, with analysts cautioning of potential market turbulence.

Market analyst Markus Thielen highlighted historical instances where bitcoin prices dipped following rate cuts, emphasizing the importance of timing and the impact of U.S. political uncertainties and weak economic data on risk assets like bitcoin.

Thielen cautioned that interest rate cuts do not guarantee higher bitcoin prices, particularly in the face of declining protocol revenues indicating reduced usage. He suggested that a bitcoin price drop below $50,000 is inevitable, pointing out concerning indicators that many traders may overlook.