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Bitcoin Drops $27K: Investor Worries Mount Over Debt Ceiling

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Bitcoin inches up, yet lacks pronounced impact. However, this growth has been relatively slow and lacks a pronounced impact on the market. Despite this, many experts believe that Bitcoin could experience a major catalyst in the near future due to the ongoing discussions surrounding the US debt ceiling.

Bitcoin Performance Over the years

Bitcoin Performance Over The Years

US President Joe Biden is optimistic about reaching an agreement on the budget after successful talks with House Speaker Kevin McCarthy. 

The looming debt ceiling and possibility of US debt default were discussed, but Republican McCarthy stated that default is “off the table” and negotiation structures have improved. 

Markets reacted positively to the optimistic tone, with the US dollar rising and the Nasdaq hitting a nine-month high.

Additionally, Tether’s recent announcement that it will invest up to 15% of net profits into Bitcoin each month pushed cryptocurrency markets higher, with BTC/USD bouncing off support around $26,600. 

However, BTC/USD remains vulnerable to short-term sell-offs and technical support must hold near $26,600 for continued upward momentum.

A re-test of the recent $30,000 double-top is possible if resistance from moving averages is broken.

 BTC/USD Chart

 BTC/USD Chart

Bitcoin Stagnates as Regulators and Wall Street Weigh in on Use-case Arguments: Will the Crypto Market Recover or Suffer a New Downward Trend?

With no clear regulatory framework and lack of convincing use-case arguments, Bitcoin’s value remains stagnant. 

This has discouraged many investors from returning to the market. If the underlying crypto fundamentals continue to be lackluster, experts predict we may experience another downward trend.

Overall, the CoinDesk Market Index (CMI), a measure of the overall crypto market’s performance, fell by 2.2% on Thursday. Despite this, equity markets closed higher on Thursday, with the Nasdaq, S&P 500, and Dow Jones Industrial Average up 1.5%, 0.95%, and 0.35%, respectively, after a late rally.

Ethereum/Bitcoin Chart in Tense Standoff: Will Resistance at 0.06787 Be Broken Soon?

The second-largest cryptocurrency by market capitalization, Ether (ETH), experienced a similar trend, declining by 1.6% to trade at roughly $1,795 on Thursday afternoon.

The current cryptocurrency chart situation is poised for a major move as resistance at 0.06787 remains stubborn while support from the 20- and 50-day moving averages hovers at 0.06630.

Experts predict a decisive break from this tight range is looming. Stay tuned for updates on this critical market development.

Ethereum/Bitcoin Chart

Debt Ceiling Debate: Mixed Views on Safe-Haven Assets

As the debt ceiling debate rages on, analysts are split on whether safe-haven assets will benefit. While some predict gold and bitcoin will surge, others remain skeptical of BTC’s potential to rise amidst a government default. 

Debt ceiling increase could lead to drain of liquidity and favorable yields for US government bonds.

As the US Treasury ramps up issuance of debt to replenish its coffers, a sharp withdrawal of monetary liquidity may occur. This movement of funds could spell trouble for Bitcoin and gold as investors flock to safer assets such as US government bonds, especially if yields rise in response to an increase in supply. 

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Other Crypto Performances

Ripple (XRP) price has seen a bullish takeover as it manages to overcome selling pressure, reaching $0.463 at the time of writing. Following a positive development in the lawsuit against the SEC, XRP bulls anticipate a summary judgment from Judge Analisa Torres leading to a possible 20% rally to the $0.559 hurdle before June.

At the same time, the network is advancing its new XRP ledger-based CBDC platform despite privacy concerns. With buying pressure increasing, the remittance token’s recovery to April highs looks imminent. 

The Relative Strength Index (RSI) supports the bullish outlook with room to cover before XRP can be deemed overbought. Stay tuned for further updates.

Disclaimer:

All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partner’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may read it. Past performance is not a reliable indicator of future performance. 

Author

  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.