Will this political agreement in the United States save Bitcoin and Crypto?

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Politicians in the United States will likely strike a deal and raise the public debt ceiling by $31.4 trillion for another two years. Amid this debate, Bitcoin price is firm but lower, trading below the psychological $30,000 level as the bulls recover from heavy losses in the middle of this week.

The Debt Ceiling Debate

There are reports that there will be more discretionary spending for military and veterans as other sectors shrink.

Additionally, there are unconfirmed reports that the Biden administration is unlikely to fund the Internal Revenue Service (IRS) to boost collection, as previously reported.

Instead, the immediate goal will be to hire more listeners and target wealthy citizens.

It is feared that the Treasury Department and the United States government will meet their obligation as early as the first half of June 2023.

While highly unlikely, as the Treasury Department announced it would liquidate $119 billion in debt that day, the market is watching how the talks evolve.

Bitcoin Firms After May 24th Losses.

Bitcoin Price May 26 | Source: BTCUSDT on Binance, TradingView

As a deal was struck and consensus reached, politicians would raise the debt ceiling again, sending mixed signals to the economy.

Unlike previous years, when major cryptocurrencies were decoupled from the traditional economy, things have changed as the importance of Bitcoins increases.

Will Bitcoin benefit?

BTC prices will likely rise if there is an event of default caused by politicians disagreeing on the way forward.

On the other hand, a deal that addresses concerns expressed by negotiating parties could signal confidence in the economy despite more debt on the table.

This averts a crisis and keeps operations going, removing uncertainty and stabilizing the economy.

In this case, the USD could strengthen, possibly reversing the gains of Bitcoin bulls over the past two trading days.

Still, the crypto community remains bullish on Bitcoin given the macroeconomic events and the halving of the next few years.

After months of steady interest rate hikes, the US Federal Reserve may slow rate increases at the next meeting in mid-June. Their action could support commodity and securities markets.

At the same time, the expected supply shock following the halving of Bitcoin miner rewards could make BTC scarcer, driving prices even higher.

Miners are special nodes responsible for confirming transactions and decentralizing the network.

If past price action can be used to predict future formations, the outlook for BTC looks positive. Before the rally from 2020 to 2021, BTC prices bottomed in 2018 and rose in 2019 before the halving event in 2020.

The same pattern may repeat itself until 2024 when the Bitcoin halving occurs.

Feature image from Canva, chart from TradingView

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