United States politicians are likely to strike a deal and raise the $31.4 trillion in government debt in two more years. Amidst this debate, the price of Bitcoin is stable but lower, tracking below the psychological $30,000 level as the bulls recover after posting sharp losses in the middle of this week.
The Debt Ceiling Debate
There are reports of more discretionary spending on the military and veterans cuts in other sectors.
In addition, there are unconfirmed ones reports that the Biden administration will likely not fund the Internal Revenue Service (IRS) to increase collection, as outlined earlier.
Instead, the immediate focus is to hire more auditors and target wealthy citizens.
There are concerns that the Treasury Department and the United States government will default on their obligations in the first half of June 2023.
Although it’s highly unlikely, as the Treasury Department says it will liquidate $119 billion in debt that day, the market is watching to see how the talks go.
Bitcoin strengthened after May 24 losses.
While a deal has reportedly been struck and consensus reached, politicians will once again raise the debt ceiling, sending mixed signals to the economy.
Unlike previous years when the main cryptocurrencies were separated from the mainstream economy, things have changed as the prominence of Bitcoin has increased.
Is Bitcoin beneficial?
BTC prices are likely to rally if there is an instance of default brought about by politicians who disagree on the way forward.
On the flip side, a deal that addresses the concerns brought by the negotiating parties could signal confidence in the economy despite more debt on the table.
This averts a crisis and keeps operations running, removes uncertainty and stabilizes the economy.
In that case, the USD could strengthen, possibly reversing the gains of the Bitcoin bulls of the last two trading days.
However, the crypto community remains bullish on Bitcoin considering macroeconomic events and the emergence of the next year.
After months of steady interest rate hikes, the United States Federal Reserve may slow rate hikes at its next meeting in mid-June. Their action can support the commodity and securities markets.
At the same time, the expected supply shock after the halving of Bitcoin miner rewards will make BTC scarce, pushing prices even higher.
Miners are special nodes tasked with confirming transactions and decentralizing the network.
If past price action can be used to predict future formations, BTC’s prospects look positive. Before the rally in 2020 to 2021, BTC prices fell in 2018 and rose in 2019 before the halving event 2020.
The same pattern may repeat itself until 2024 when the Bitcoin halving occurs.
Feature Image From Canva, Chart From TradingView
