Stablecoin Expansion Policy, Will It Be A Catalyst For Bitcoin Price Surge

Adoption of stablecoins by the United States as a mid-to-long-term positive factor for Bitcoin (source: CoinGape)

An analysis has emerged that the United States government's move to address the fiscal deficit through the expansion of the stablecoin market could serve as a strong catalyst for the rise in Bitcoin (BTC) prices. According to Daily Hodl on the 29th (local time), macroeconomic expert Luke Gromen analyzed that “the expansion of stablecoins will not only drive demand for US Treasuries but also act as a structural upward pressure on Bitcoin.”

Recently, Scott Becent, Secretary of the US Treasury, projected that the stablecoin market could grow to $3.7 trillion by 2030. He expressed expectations that stablecoins could increase demand for US Treasuries, lower government borrowing costs, and consequently help alleviate the fiscal deficit. Since most of the reserve assets of stablecoins consist of US Treasuries, this analysis suggests that government fiscal policy and the digital asset market are connected.

Luke Gromen emphasizes that Bitcoin will play a key role in this situation. He said, “Stablecoins are generally a liquidity source used to purchase cryptocurrencies including BTC, and for the market to grow, a rise in BTC prices must be a prerequisite.” In fact, he projected, “If the value of the stablecoin market grows to $3.7 trillion, the market capitalization of Bitcoin could expand to at least $8 trillion and up to $30 trillion.”

Furthermore, he emphasized the potential for leading growth of Bitcoin based on correlation between the two markets, noting that “historically, Bitcoin's market capitalization has been at least 2.5 times to a maximum of 12 times higher than that of the stablecoin market.”

The current stablecoin market is worth approximately $253.2 billion, which is still in the early stages compared to Becent's predictions. However, since the United States government recognizes stablecoins as a strategic financial instrument, it is expected that once related policies are fully implemented, they could bolster the general upward trend in the cryptocurrency market, especially Bitcoin's mid-to-long-term rise.