Summary
- Bitcoin (BTC) has come under strong selling pressure and is trading 2.48% down at a price of $27,116.
- The US President Joe Biden and House Speaker Kevin McCarthy reached a deal to suspend the debt ceiling until January 1, 2025.
- Analysts have revised their expectations for a dovish monetary policy by the US Fed.
Bitcoin Dips Below $28K
Bitcoin (BTC) has once again come under strong selling pressure and is trading 2.48% down at a price of $27,116 with a market cap of $525 billion. Along with Bitcoin, the broader cryptocurrency market is down by 1.89 while altcoins have also dropped close to 2%.
US Debt Ceiling Vote Looms
Earlier this week, the BTC price surged past $28,000 on the optimism surrounding the debt ceiling. However, this move was short-lived and Bitcoin is facing major selling pressure over the last two days moving it close to $27,000. Last Sunday, US President Joe Biden and House Speaker Kevin McCarthy reached a deal to suspend the debt ceiling until January 1, 2025. If the lawmakers agree for raising the debt ceiling, the US Treasury would issue $1 trillion of debt to replenish its Treasury General Account. The deadline to raise the debt ceiling is just a week away or else the US would default for the first time ever.
Impact on Bitcoin Price
Edward Moya, senior market analyst at foreign exchange Oanda wrote: “Typically, when governments issue debt that takes their debt to GDP at uncomfortable levels, that should be good news for crypto”. Analysts express concerns over potential quantitative tightening impact on Bitcoin if there’s an increase in interest rates further due to raising of US debt ceiling.. This could potentially send shockwaves across global financial markets hurting risk assets like stocks and crypto majorly leading to further dip in Bitcoin prices below $25K mark.US Quantitative Tightening Ahead? Although there were talks of US planning to raise its debt ceiling earlier this week but it has yet not come into fruition .Analysts aren’t optimistic about future scenario as raising ofdebtceiling might give Federal Reserve some roomto raisetheinterestratesfurther thus revising their expectationsof dovishmonetarypolicy bytheUSFed .As per CMEFedWatchTool ,there’s66 %probability thatFedwillraisetheinterestrates by25 basispointsfor fourthconsecutivetimein June meeting .
< h2 >Conclusion Uncertainty overtheUSdebtceilingand potentialquantitativetighteningimpactonBitcoincould leadto furtherdipinpricebelow$25Kmark .Although thereweretalksofUSplanning toraisethedebtceilingearlierthisweekit hasyetnotcometofruition ,thus investorsareonedgeasdeadlineto raisethedebtisjustaweekawayor elseUSTreasurywoulddefaultforthefirstevertimeleadingtomajorsellingpressureacrossglobalfinancialmarketshurtingriskassetslike stocksandcrypto .
