Bitcoin (BTC) continued its mild downside consolidation on Tuesday, slipping just below $27,000 as investors closely watched the debt ceiling negotiations in Washington.
According to CoinDesk data, the largest cryptocurrency by market cap recently traded at $26,950, down about 1.3% on the day. In the last 24 hours, the price of BTC has fluctuated between $26,800 and $27,400.
While Treasury Secretary Janet Yellen warned that the US is likely to breach the debt ceiling as early as June 1, saying a default “could lead to a recession,” several analysts believe a debt ceiling resolution could potentially boost Bitcoin.
“The current macroeconomic situation is, in our view, conducive to increased crypto adoption,” Joe DiPasquale, CEO of crypto fund manager BitBull Capital, told CoinDesk in an email. “The debt ceiling hike also bodes well for risky assets as market participants look to safeguard their wealth,” he added.
Lucas Outumuro, head of research at blockchain analytics firm IntoTheBlock, told CoinDesk that there could “certainly be an offer for BTC” whether or not there is an agreement on the debt ceiling.
Outumuro sees the impact of these negotiations and the ongoing banking crisis as similar: “Both highlight the weaknesses of the system and raise doubts about its long-term sustainability, creating demand for potential alternatives such as crypto.”
Ether (ETH), the second largest cryptocurrency by market cap, slipped 0.2% on Tuesday to change hands around $1,820. Among other digital assets, LDO, the governance token for liquid staking platform Lido, continued its strength on Monday, surging another 3%. Layer 2 blockchain Polygon’s native MATIC token is down 2.8% to around $0.82.
The CoinDesk Market Index (CMI), which measures the overall performance of the crypto market, fell 1.1% on the day.
Stock markets closed lower on Tuesday, with the Dow Jones Industrial Average (DJIA) down 1%, the S&P 500 down 0.6% and the tech-heavy Nasdaq down 0.2%.
In bond markets, the 2-year government bond yield rose 6 basis points to 4.08%, while the 10-year government bond yield rose 3 basis points to 3.54%.
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