Cryptocurrency markets are witnessing a surge in value, aligning with positive developments in U.S. lawmakers’ efforts to avert a looming debt default. Significant gains have been registered by bitcoin and ethereum, the most widely traded digital currencies, which reflect increasing investor confidence.
The 2.9% gain in bitcoin brought it to about $27,500, while the rise of Ethereum saw an increase of 1.38% and was worth around $1,850. Over the last week, these coins have shown a consistent rise in value and increased by 2.5%.
Altcoins such as Cardano and Solana outperformed these gains, experiencing respective increases of 3.4% and 5.2%, as reported by CoinGecko. The only cryptocurrency in the top 20 by market capitalization to experience a slight decline was Tron’s TRX, which decreased by 0.4% to $0.076. However, the entire week’s overall positive trend continued to be displayed by Tron.
The rise in bitcoin’s value was attributed to progress on Capitol Hill by trader @Rager. He thanked the president for his weekend boost, crediting it with a positive mood in the markets.
The consequences of a potential default are the reason for the urgency to reach agreement on the debt ceiling. The US Treasury Secretary, Janet Yellen, has said the failure to raise the debt ceiling on time would cause an “economic disaster” for the US.
For weeks, the ongoing dispute between the Democrats and the Republicans has dragged the country closer to the so-called “Xenodate” when the government is unable to meet its debt obligations. At the same time, US Treasury Secretary Janet Yellen suggested that it could arrive early on June 1.
On May 8, Yellen acknowledged a substantial gap between Republicans and President Biden concerning the debt ceiling. Biden highlighted “wealthy tax cheats and crypto traders” as a sticking point, stating that they should not be protected under any agreement.
Media reports indicate that it remains unclear whether Republicans have agreed to include provisions in the debt ceiling bill that would impact cryptocurrency investors. As reported by The Associated Press, Speaker McCarthy stated that the compromise did not get everything everyone wanted.
Despite concerns about the debt crisis, it was considered by analysts as proof that a default is unlikely given past instances of last minute agreements in discussions to raise the ceiling, e.g. in 2011, just one year ago. However, experts noted that crypto prices may experience a temporary decline as investors seek refuge in traditional safe-haven assets like the U.S. dollar during times of market stress.
As the June 1 deadline approaches, it remains unclear whether a last minute agreement will have any impact on cryptocurrencies markets. But investors’ cautious optimism on a bipartite resolution of the looming debt crisis is reflected in today’s crypto market trends.
Beganski, A. (2023, May 28). Bitcoin and Ethereum Rise as U.S. lawmakers scramble to Dodge Historic Debt Default. Decrypt. https://decrypt.co/142689/bitcoin-ethereum-rise-avoid-debt-ceiling-default