2023-05-29 14:33:48
Bitcoin rose to a three-week high on the news that the US government had reached an agreement to suspend the debt ceiling.
Crypto markets started trading in the green on Monday morning. The momentum was given by the debt ceiling suspension agreement between US President Joe Biden and Kevin McCarthy, the Republican representative leading the Congress.
But a tentative deal to suspend the federal government’s $31.4 trillion debt ceiling still needs to pass Congress. Bloomberg according to regardless, this increased the willingness to take risks on global markets.
Bitcoin is back in the green
John Toro, head of trading at the Independent Reserve crypto exchange, said: “The positive sentiment this morning is directly related to the resolution of the debt ceiling impasse.” Then he added:
“Front-end funding costs remain very high relative to crypto yields, resulting in a negative position for long holders. This will continue to prove a headwind for VCs and cryptocurrencies.”
BTC rose to nearly $28,500 a few hours ago, the highest since May 8. It has fallen back slightly since then, but is still hovering near $28,000 after a 4% gain on the day.
However, the longer-term outlook still paints a picture of sideways consolidation for BTC.
The debt ceiling is a legal limit on the amount of public debt that the Treasury can take on. This is a ceiling that determines how much money the federal government can pay by borrowing more on top of the debt it already has.
The debt limit is currently US$31.4 trillion. A few weeks ago, Treasury Secretary Janet Yellen warned that a default was highly likely unless a deal was reached. According to the deal, this debt limit would be suspended until January 2025, which means that from now on there is no limit to how much more debt the government can take on.
Tommy Honan, head of market analysis at crypto exchange Swyftx, commented: “It is possible that the mere easing of the debt ceiling agreement will bring traders back to the table and trigger the next rally in the price of Bitcoin”.
Cryptocurrency rally
The total market capitalization of the crypto sector increased by 3% during the day to reach $1.22 trillion. The one-time capital inflow of $37 billion gave all cryptocurrencies a boost, and the move brought some volatility to a market that had been stagnant in recent weeks.
Ethereum rallied 3.4% on the day and crossed the $1,900 level for the first time since May 8. Other altcoins were also in the green at the time of writing, but their returns were not as great as Bitcoin, which is clearly leading the markets today.
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