The Crypto Markets Welcome The U.S. Debt Limit Tentative Agreement
President Joe Biden announced in a May 28, 2023 Tweet that a budget agreement on raising the US debt limit had been reached in principle, and he strongly urged the House of Representatives and the Senate to pass the deal right away.
This follows days of uncertainty over when an agreement on the U.S. debt ceiling would be reached, raising fears of a potential debt default in early June.
On May 26, 2023, the Secretary of the Treasury, Janet L. Yellen, sent another letter to all members of Congressional leadership highlighting the risk that the Treasury would be unable to satisfy its obligations if Congress did not raise or suspend the debt limit before that time.
In a Tweet, Kevin McCarthy, the Speaker of the United States House of Representatives, also confirmed that a tentative agreement had been reached. Details of the debt ceiling agreement will be shared by McCarthy shortly.
Analysts are divided over the impact the debt ceiling crisis would have on the crypto markets
Some analysts have argued that problems in the traditional finance market have tended to increase investor interest in cryptocurrency. Raising the debt ceiling would prompt more money printing and boost capital inflows into the crypto industry.
Other analysts are of the view that problems in the traditional finance market can prove bearish for crypto in the long term.
Still, some other analysts believe that a U.S. debt default could see stablecoins lose their investment appeal since some stablecoins hold reserves in short-term U.S. government bonds and cash (in U.S. dollars).
In the 24 hours preceding the debt ceiling tentative agreement, Bitcoin and Ether were trading under US$27,000 and US$1,840, respectively, according to CoinGecko data. In the 24 hours following the announcement of the tentative debt ceiling agreement, Bitcoin and Ether traded over US$ 27,000 and US$ 1,850, respectively.
In a statement, the U.S. Chamber of Commerce commended the tentative deal to prevent the debt Limit Crisis. The U.S. Chamber President and CEO, Suzanne P. Clark, said the U.S. is a step closer to averting an economic crisis.
The US Chamber of Commerce said that the agreement would see the U.S. confronting a future debt limit drama and lower the national debt. The Chamber of Commerce called for Republicans and Democrats to work together to secure the nation’s economic future and competitiveness.
The details of the debt ceiling agreement, its approval through Congress in the coming days, and the Federal Open Market Committee (FOMC) meeting scheduled for June 13-14 will likely provide further direction to the crypto and other financial markets.
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