Bitcoin Dips Below $28K as US Debt Ceiling Vote Looms, Could Push BTC to $25K

Bitcoin Price Drops

•The world’s largest cryptocurrency Bitcoin (BTC) has come under strong selling pressure and is trading 2.48% down at a price of $27,116 with a market cap of $525 billion.
•Uncertainty over US debt ceiling raise may cause further selling pressure on the BTC price and push it to $25,000.
•Analysts are expecting a dovish monetary policy by the US Fed due to higher debt levels.

US Debt Ceiling Vote Looms

The United States government is facing increasing pressure to raise its debt ceiling in order to avoid defaulting for the first time ever. Talks between President Joe Biden and house Speaker Kevin McCarthy have resulted in an agreement to suspend the debt ceiling until January 1, 2025 but lawmakers must still agree for this deal to go through. If approved, the US Treasury would issue $1 trillion of debt in order to replenish its Treasury General Account before the deadline next week.

Impact on Bitcoin

Cryptocurrency investors were initially optimistic about the potential implications of raising the US debt ceiling on Bitcoin (BTC). This optimism was short-lived as uncertainty loomed around with no clear resolution yet in sight which caused BTC prices to dip below $28K and move close towards $27K. Along with Bitcoin, other cryptocurrencies have also dropped by almost 2%.

Quantitative Tightening Ahead?

Although raising the US debt ceiling might provide much needed relief for now, analysts fear that it could lead to quantitative tightening which could hurt risk assets like stocks and crypto majorly. Edward Moya from foreign exchange Oanda noted that too many crypto companies might face difficult financing options over the next year if governments increase their debt levels beyond comfortable levels. The CME FedWatch Tool currently suggests a 66% probability that interest rates will be raised by 25 basis points during the June meeting which is part of a dovish monetary policy expected by analysts going forward.

Conclusion

The outcome of Tuesday’s vote on whether or not to raise the U.S.’s debt ceiling will be crucial for all asset classes including bitcoin and cryptocurrencies overall as it could potentially send shockwaves across global financial markets if failed or cause further quantitative tightening if successful depending on how much it gets raised by . Investors should keep an eye out for news updates regarding this matter as they make their decisions going forward over these uncertain times