US politicians are expected to reach a consensus and raise the government’s debt ceiling of $31.4 trillion for another two years. Meanwhile, Bitcoin remains stable but lower, trading below the psychological level of $30,000 as bullish sentiment recovers after mid-week losses.
According to reports, the government will reduce discretionary spending in some sectors, while diverting more resources towards the military and veterans. The Biden administration is also alleged to be diverting funding away from the Internal Revenue Service (IRS) to target wealthy citizens and hire more auditors.
Although unlikely, concerns persist that the Treasury Department and the US government could default on their financial obligations from June 2023. The market is closely watching developments as the US considers how to avert a crisis.
In previous years, top cryptocurrencies have been decoupled from the mainstream economy, but as Bitcoin’s prominence rises, it has become more intertwined with economic events.
If there is a default caused by political disagreements, BTC prices are likely to rally. However, if the US reaches a deal that addresses concerns from all parties, this could signal confidence in the economy even though it means more debt will be taken on. This would avert a crisis, stabilize the economy, and remove uncertainty, which could strengthen the US dollar and potentially reverse gains made by Bitcoin bulls in the last two trading days.
Nevertheless, the crypto community remains bullish on Bitcoin, citing macroeconomic events and next year’s halving as contributing factors. The United States Federal Reserve is expected to slow down rate increments in their next meeting in mid-June, which could support the commodities and securities markets.
Furthermore, the expected supply shock following the halving of Bitcoin miner rewards could make BTC scarcer, driving prices even higher. Miners are special nodes responsible for confirming transactions and decentralizing the network. If past price action is anything to go by, BTC may experience a similar pattern to the rally of 2020 to 2021, where prices bottomed in 2018, rose in 2019, and surged after the halving event in 2020. This same pattern could be repeated until the next halving event in 2024.
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...
View J-S Tremblay website
