Willy Woo: The Global Financial System May Face a Historic Debt Restructuring in the Next 5 Years

Willy Woo, an on-chain analyst, has warned that the world may enter a historic period of debt restructuring within the next five years; an event that, according to him, could pressure the value of fiat currencies and strengthen the position of assets like Bitcoin and gold.

According to Mihan Blockchain, Woo's prediction aligns with the long-term debt cycle views of renowned investor Ray Dalio. Woo believes that in such circumstances, Bitcoin and gold can serve as a means to preserve asset value, as long as governments have not changed the structure of the monetary system.

Why Does Willy Woo Expect a Debt Restructuring?

A debt cycle restructuring occurs when governments and the financial system can no longer manage accumulated debts and are forced to change the financial structure and repay obligations. Such events typically happen every 50 to 80 years and can be accompanied by a decrease in currency value and a redefinition of financial obligations.

Woo wrote on the social media platform X:

Almost every 50 to 80 years, the accounts are reset, and everything starts anew. The next five years is the time for this reset.

He also considered gold and Bitcoin as an escape route from the consequences of these changes.
U.S. Government Debt -- Source: BBC

The U.S. government debt is one of the factors that has increased concerns about this scenario. The country has about $32 trillion in tradable treasury securities, and the net issuance of new securities is expected to reach $2.1 trillion this year. At the same time, demand from foreign buyers has decreased, and the cost of servicing the debt is also rising.

Will Bitcoin and Gold Be the Big Winners of Financial Restructuring?

Historical experience shows that when governments face debt pressure, they sometimes resort to printing money instead of accepting the consequences of financial restructuring. Such a policy can undermine confidence in fiat currencies and government bonds, benefiting assets that lie outside the government debt system.

Gold has played such a role in the global economy for years, and Bitcoin advocates consider it the digital and transferable version of this precious metal.

In this context, Luke Gromen, a macroeconomic analyst, has proposed a scenario in which the price of gold could rise to $18,000 in the event of a complete dollar crisis and increased demand for a neutral reserve asset. He believes that financing the cost of debt interest through money printing could erode investor confidence in U.S. treasury securities.

However, the current state of Bitcoin is still tied to an important technical level. CryptoQuant data shows that the price of this cryptocurrency is testing the "realized price of traders"; an indicator that reflects the average purchase price of coins transferred over the past one to three months.
Bitcoin Testing Its Realized Price -- Source: CryptoQuant

This level has historically served as a support or resistance. According to an analyst named Trdaer_Gemini, if Bitcoin can remain above this range and move away from it again, it indicates that recent buyers are still defending their position. Conversely, breaking this level and failing to reclaim it could signal a weakening of this support.

Despite these concerns, some analysts believe that the current debt cycle is still in its middle stages and that the increase in interest rates has not yet shown all its effects on the stock market and the real economy.

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