Investors are keeping a close watch on the debt ceiling negotiations in Washington as Bitcoin’s value recently fell below the $27,000 level. US Treasury Secretary Janet Yellen’s warnings that the US may breach the debt limit as early as June 1 have significantly raised the stakes for both the financial markets and the cryptocurrency industry. However, investors believe that Bitcoin may rebound if there is a resolution to the debt ceiling issue.
Bitcoin‘s struggle to maintain its value has persisted, with the cryptocurrency experiencing a 24-hour loss of almost 1%, currently trading at $26,863 on CoinGecko. Its seven-day decline of 2.7% reflects a persistent bearish trend in the market. The low liquidity in crypto markets has been due to regulatory uncertainty. Jane Street and Jump Crypto have retreated from crypto trading in the US, citing concerns over regulatory challenges, adding to existing concerns surrounding the lack of regulation in the crypto industry.
Bitcoin’s 1% market depth, which measures liquidity conditions, has dropped by 4% over the past month, while Ethereum‘s has fallen by 2%. Altcoin liquidity has suffered even more, with a roughly 17% decline on a monthly basis. This low liquidity has made it difficult for traders to execute large orders without experiencing significant price slippage, further contributing to the bearish trend in the market. Investors are closely watching the regulatory landscape to determine if a more favorable environment for crypto trading can be established.
Bitcoin’s prospects for rebound could hinge on a resolution to the ongoing debt ceiling issue. Historically, Bitcoin has been regarded as a hedge against inflation and economic uncertainty, attracting investors seeking alternative assets. During times of market distress, Bitcoin has exhibited resilience and demonstrated a tendency to rally. A resolution that ensures the stability of the US economy could restore investor confidence, potentially leading to increased demand for Bitcoin and other digital assets.
Source: NY Times
About the author - J-S Tremblay
I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...
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