You have undoubtedly noticed that the United States of America is currently emptying its piggy banks at a rapid pace in order to pay the bills. In January it reached its debt ceiling of $ 31.4 trillion and since then it has been living on reserves, which are now starting to run out.
There are those who argue that America will no longer be able to pay its bills on June 1 if a debt ceiling agreement is not reached soon.
What does that mean for Bitcoin?
Negotiations between Republicans and Democrats in Congress are currently at a deadlock. That means that Bitcoin mostly trades sideways in anticipation of a result.
We did receive unexpectedly positive data on the US economy yesterday. The number of unemployment claims last week came in at 229,000, while 245,000 were expected.
Unemployment is therefore growing at a lower rate than originally thought. The US economy also grew for the third consecutive quarter, this time at a rate of 1.3 percent.
Those figures did little for the market, except that Nvidia had another green day. The chipmaker naturally benefits disproportionately from the rise of artificial intelligence, which requires a lot of chips.
Most likely
The most likely outcome regarding the impasse in the debt ceiling negotiations is that Congress and President Joe Biden’s administration reach an agreement after all.
This would bring this period of uncertainty and at times volatility to an end. Perhaps Bitcoin can benefit from that, but much will depend on the next interest rate decision by the Federal Reserve.
For now, it is expected that they will come up with an interest rate increase and raise the interest rate again on June 14 by 0.25 percent to the range of 5.25 – 5.50 percent.
That would not be very bullish for Bitcoin and also a rather strange decision from the Federal Reserve given the aggressive rate hikes of the past 14 months. Yesterday’s economic data in particular will have contributed to this.