Despite president Joe Biden’s earlier dire crypto warning, Bitcoin, Ethereum, and other significant cryptocurrencies have applauded a U.S. debt ceiling settlement.
As rumours of a potential China-led cryptocurrency price bull run circulate, the price of bitcoin has surged back towards $30,000 per bitcoin and reached its highest level since early May. The price of ethereum has also increased in tandem.
Now that an agreement to prevent a “catastrophic” default on the United States’ debt is almost complete, the markets are anxiously watching what JPMorgan analysts believe might be the issue of over $1.1 trillion in new Treasury bills, which could drain hundreds of billions of dollars from the market.
According to Alex Lennard, investment director at global asset manager Ruffer, if liquidity begins to leave the system, for whatever reason, this creates a setting where markets are prone to crashes.
According to Mike Wilson, an equities strategist at Morgan Stanley, the massive Treasury bills issuance intended to fill empty U.S. Treasury coffers will effectively drain a lot of market liquidity and could act as the trigger for the correction we have been predicting.
Following the Federal Reserve’s historically quick ramp-up over the previous year as it struggles with stickier-than-expected inflation, economic data released this week may signal additional interest rate increases.
According to Yuya Hasegawa, cryptocurrency market analyst at Tokyo-based Bitbank, the debt ceiling issue may soon be resolved, but the Fed funds rate’s future course will continue to influence market sentiment. As a result, bitcoin’s weekend rally may be hampered depending on a series of economic reports due this week, including the manufacturing PMI from the ISM and the May jobs report.
The most recent U.S. non-farm payroll statistics will be released on Friday, and it will provide insight into the Federal Reserve’s initiatives to calm the scorching labour market. An increase of 180,000 jobs is predicted by economists, which is less than the little more than 250,000 jobs added in April. In comparison to April’s 3.4%, unemployment is predicted to rise slightly to 3.5%.
According to Hasegawa, recent economic indicators have shown how resilient the American economy is. Most importantly, April’s reduced mean PCE inflation rate and core CPI and PCE indexes did not demonstrate any appreciable improvements. The probability of another rate hike in June is now estimated by the Fed Funds futures market to be about 65%, and if that probability rises further, it will probably be negative for bitcoin and other cryptocurrencies.
