Bitcoin price is up over 1.5% this morning after briefly slumping to $26,500 yesterday. His sudden move comes after news that US President Joe Biden and Republican Kevin McCarthy have agreed to a debt ceiling debate. The debt ceiling was one of the hottest debates in the US.
Bitcoin price peaks with debt ceiling deal
The debt ceiling refers to the limit of borrowing that the Treasury can make in the United States. The US Congress has been debating recently whether or not to remove this limit. As we quoted as Kriptokoin.com, US Treasury Secretary Janet Yellen said that the debt limit could be removed.
In the hottest development, President Joe Biden and prominent Republican Kevin McCarthy have agreed on a debt ceiling. Biden confirmed the deal on his Twitter account, saying it was “an important step in reducing spending”.
Earlier this evening, Speaker McCarthy and I reached a budget agreement in principle.
It is an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone. And, the agreement protects my and…
— President Biden (@POTUS) May 28, 2023
Bitcoin price exceeds $27,000
Bitcoin (BTC) price has returned to the $27,000 region after the news broke. Yesterday evening, it was heading towards 26,000 to test the 200-week MA line as support. At the time of writing, it is trading above the $27,000 region, up 1.7% on the intraday.
Joe Biden admits rejection will cause problems
Biden stated that if there is no agreement, the US economy will be dragged into a serious financial crisis. He also acknowledged that the result would be a recession, negative effects on retirement accounts, and the loss of millions of jobs. By the way, it should be noted that Biden has previously discussed a deal for crypto market investors.
Previously, McCarthy had announced the suspension of deal negotiations, saying the president had wasted several months and refused negotiations on the debt ceiling. This deal announcement came just days before the deadline of June 1, 2023. This would have caused a great turmoil in the financial markets.
US raises debt ceiling
President Biden confirmed the news by stating, “We agreed in principle with Speaker McCarthy on the budget deal.” However, further deliberation and finalization of the legislative text are required before the deal is presented to the US Congress. The interim agreement includes raising the US federal government’s $31.4 trillion debt ceiling. It also proposes raising the debt limit and limiting spending for two years, actually.
Meanwhile, the crypto market is pricing the deal news upwards. Not just Bitcoin, but the entire altcoin market, including ETH and ADA, followed the momentum. With a relief rally in the US stock markets, more upside movement is expected in Bitcoin.
What’s next?
When the debt ceiling rises, the Treasury is expected to replenish its cash reserves by issuing more government bonds. Thus, it can reduce the liquidity in the system and provide positive momentum to bond yields. Bitcoin (BTC) often moves inversely with bond yields. Therefore, the possibility of a decline with increasing bond issuance should not be ignored.
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