Bitcoin and Ethereum Rise as U.S. Lawmakers Scramble to Dodge Historic Debt Default
May 29, 2023

Bitcoin and Ethereum Rise as U.S. Lawmakers Scramble to Dodge Historic Debt Default

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Cryptocurrency prices saw some lift over the weekend as lawmakers on Capitol Hill appeared less likely to trigger the first-ever debt default in U.S. history.

Republican House Speaker Kevin McCarthy and President Joe Biden were inching closer to a finalized deal on America’s debt ceiling on Sunday and assessing the support they have to pass legislation this week, per the Associated Press.

“Earlier this evening, Speaker McCarthy and I reached a budget agreement in principle,” Biden said on Twitter on Saturday. “Over the next day, our negotiating teams will finalize legislative text.”

Meanwhile, Bitcoin had climbed 2.9% over the past day to around $27,500, according to CoinGecko. Ethereum was up 1.4% to around $1,850 as well, as both coins posted gains of 2.5% over the past week.

Some altcoins, including Cardano and Solana, outpaced those gains, rising 3.4% and 5.2%, respectively, according to CoinGecko. The only top-20-coin by market capitalization in the red was Tron’s TRX, down 0.4% to $0.076 over the past day. But Tron still had a good week overall.

On Twitter, cryptocurrency trader @Rager attributed the increase in Bitcoin’s price to the parting clouds on Capitol Hill. “Thanks for the weekend pump, White House,” he wrote.

The stakes are high as America’s coffers begin to run dry, Treasury Secretary Janet Yellen warned weeks ago, explaining that the U.S. would be shaken by an “economic catastrophe” if Washington failed to raise the debt ceiling in time.

The disagreement between Democrats and Republicans has dragged on for weeks as the country quickly approaches what the White House has described as America’s “X-date,” the point at which the government can no longer meet its debt obligations. That day could come as early as June 1, according to Yellen.

On May 8, Yellen acknowledged there was a “big gap” between Republicans and the president on raising the debt ceiling. One sticking point, according to Biden, was “wealthy tax cheats and crypto traders” that he said shouldn’t be protected under a deal.

Based on media reports, it was unclear whether Republicans had agreed to certain measures on the debt ceiling bill that would impact crypto investors. McCarthy told reporters on Sunday that the compromise “doesn’t get everything everybody wanted,” according to the Associated Press.

Analysts told Decrypt last week that a default was unlikely, citing previous debt-ceiling debacles that ended in last-minute deals like in 2011. But, counterintuitively, several experts said crypto prices could slide as investors flee to safe-haven assets like the dollar during periods of market stress.

As June 1 looms, it remains unclear whether Washington can pull it together in time or what impact a last-minute deal could have on markets. But, for the time being, it appears crypto markets are pricing in some faith on the bipartisan front.

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