Blackrock CEO Laurence Fink believes that the recent “drama” around the US debt ceiling has deteriorated global confidence in the US dollar, something other analysts speculate could provide some tailwind for Bitcoin (BTC).
Fink’s comments come as US lawmakers passed a long-awaited bill to raise the $31.4 trillion debt ceiling on June 1. The US Treasury indicated that the deadline for raising the debt ceiling is June 5th. .
314-117: The House passes the Biden-McCarthy debt ceiling agreement, raising the debt limit through 2025 and setting a two-year discretionary spending cap.
71 Republicans and 46 Democrats voted “no” on the bill. pic.twitter.com/RdU42whDd5
– recount June 1, 2023
According to May 31 a report From Reuters, Fink told Deutsche Bank’s financial services conference attendees that he expects the Fed to raise rates at least twice in the coming months, claiming he saw “no evidence” of lower general inflation.
“I think we will have a decision, … but let’s be clear, the United States is putting its reserve currency status at risk.”
Many Bitcoin advocates and cryptocurrency investors see BTC as a hedge against inflation and debt concerns caused by central banks increasing the overall money supply.
Josh Gilbert, a market analyst from eToro, told Cointelegraph that the debt-ceiling drama is once again shining a light on Bitcoin, as investors may seek safe-haven assets with limited supply outside the constraints of the current financial system.
“The debt ceiling deal once again highlights the utility of Bitcoin because it is essentially a break from the traditional financial system. Given its limited supply, it is free from the issues the US government is facing at the moment.
However, Gilbert notes that while the US banking crisis and debt-ceiling debacle highlight the underlying utility of an asset like bitcoin, any investors hoping for current events to provide a massive rally in bitcoin’s value should temper their expectations.
“There is more fear than optimism in the short term because of the uncertainty around these issues and the liquidity problems that they will cause,” Gilbert said. “When the banking crisis hit, it lowered inflation expectations and raised interest rates, which is why we saw bitcoin soar.”
Matteo Greco, a research analyst at investment firm Fineqia International, echoed those sentiments Tell CNBC states that the current downward pressure on the Bitcoin price is primarily due to investor fears that the US is reaching the debt ceiling.
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Usually when central banks raise interest rates, investors choose to get their money out of risky assets like cryptocurrencies and growth stocks.
Since Bitcoin was so low in 2022, the expectation of this high interest rate environment made investors take the opportunity to buy Bitcoin on a big drop. Expectations for rate hikes have changed dramatically so far this year and in the past few weeks.
Based on Gilbert’s assessment, if Fink’s fears of a price increase come to fruition, it could send the price of Bitcoin down even further from its current price. If the opposite happens, and the Federal Reserve pauses its rate hike cycle in June, Gilbert says investors can expect to see some positive price moves for Bitcoin.
Bitcoin is currently changing hands for $27,161, down 2% in the last 24 hours and 6.4% from the previous month, according to data from the Cointelegraph Price Index.
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