Bitcoin Continues To Rise As Investors Wait On Debt Ceiling Agreement

By Kevin • May 30, 2023 11:58 am • Comments

According to the most recent data, Bitcoin was able to recover over the $28k mark during the Memorial Day weekend for the first time since the past month.

Investors are now looking at how the crypto market will react to the news of the upcoming debt ceiling agreement which will be voted on soon.

As it stands right now, Congress will be voting on the agreement as soon as this Wednesday and the result of it could affect all financial markets heavily.

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The tentative deal is to once again raise the nation’s debt ceiling in order to avoid a default.

Investors are worried about what the consequences are to always raising the debt ceiling and it seems that the crypto market is continuing to rise due to these concerns.

CNBC reports:

“However … This means that, in the mid-term, money is removed from more risky assets to buy government bonds. The consequence could be an additional slowdown in volumes and liquidity for the stock and digital asset markets, with a potential negative impact on prices,” Greco added.

As the debt ceiling negotiations weighed on crypto investors last week, the minutes of the latest Federal Reserve meeting also showed central bank officials are divided on where to go with interest rate hikes.

With both of those factors, bitcoin has started behaving like a risk asset again, just as it was starting to trade more in tandem with gold earlier this year.

Bitcoin is now testing its March resistance level of about $28,800, said Yuya Hasegawa, a crypto market analyst at Japanese bitcoin exchange Bitbank.

Treasury Secretary Janet Yellen had warned in the past that the US could experience an “economic catastrophe” if the debt ceiling was not raised in time.

The debt ceiling agreement also has unknown impacts on crypto specifically, but Biden had mentioned that he believed that “crypto traders” should not be protected under the deal.

This is not the first time that a debt agreement deal had to come through in the last minute as this has happened in the past such as 2011.

The continued rise and persistence in the crypto markets during this time is quite impressive, however, as risk assets tend to fall during times of market uncertainty.

DeCrypto.co concludes:

Analysts told Decrypt last week that a default was unlikely, citing previous debt-ceiling debacles that ended in last-minute deals like in 2011.

But, counterintuitively, several experts said crypto prices could slide as investors flee to safe-haven assets like the dollar during periods of market stress.

As June 1 looms, it remains unclear whether Washington can pull it together in time or what impact a last-minute deal could have on markets.

But, for the time being, it appears crypto markets are pricing in some faith on the bipartisan front.

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