Key Takeaways:
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Historical data failed to show a parallel link between Bitcoin prices and increasing US debt ceiling.
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Bitcoin’s stability reflects investors believing that the US dollar will continue to lose value due to US fiscal policy.
U.S. senators successfully advanced President Trump’s ‘One Big BeaFiy Bill’ on Tuesday, moving it a step closer to being law. The suggested $ 5 trillion increase in debt ceiling has provoked significant controversy, and many bitcoin (Btc) Proponents believe that moving can be a catalyst for a new all-time high in 2025.
Although many solid studies point to a Bullish outlook for bitcoinThe previous increase in US debt ceilings and suspensions usually lead to bearish results, at least six months to comply. In fact, the event of June 2023 stands as the only example in which the BTC posted the acquisitions afterwards.
Some may argue that the price of markets with these developments in advance. However, that assumption is weakened when viewing Bitcoin’s flat performance. On Tuesday, Bitcoin takes $ 105,000, the same level as five months before.
Bitcoin’s stability has taken place despite the extensive expectations that the Trump administration will push to increase the debt ceiling. At that time, economists are expected to run out of government funds by mid -August.
A Bitcoin Bull Run is holding a small relationship with the US debt ceiling
The Nonpartisan Congressional Budget Office estimates that the proposed law will add at least $ 3.3 trillion to the federal shortage in the next decade. The nearly 900-page bill passed to the Senate by a vote margin and now returned to the US House of Representative.
Sven Henrich, founder of the NorthMantrader, criticized US Secretary of Treasury Scott Bessent that the bill represents a step toward “US debt control.”
According to Henrich, raising the debt ceiling while “running record deficiencies” and decreasing interest rates aligned with the “modern financial theory” – an approach that suggests that governments can fund expenditures by creating money, rather than by taxes or borrowing.
Instead of simply focusing on the decisions of the legislature, attention should turn to how the central bank responds. If the US Federal Reserve maintains a higher interest rate, debt delivery costs increase. On the other hand, a move towards more spacious financial policy may break the strength of the US dollar.
Overall, the higher US treasury yield reflects the reduced investor confidence, as consumers demand more compensation for detected risks. History, this indicator has shown a Positive relationship At the price of bitcoin, which means both tend to rise together, given the cryptocurrency appeal as an alternative owner.
Therefore, Bitcoin holding more than $ 105,000 while Treasury’s 10-year yield fell to 4.25% from 4.50% on June 6 suggests early signs of a decay. Although, it remains too early to declare Bitcoin a proven property reserve, especially if both Gold and the S&P 500 approach their own high times.
Related: Bitcoin holds firmly while major catalysts are aligned for breakout above $ 110k
In effect, the broader market appears pricing in a The US dollar is weak.
According to “The Kobeissi Letter,” lowering the dollar came as investors retaliated with tariffs, US spending shortage, and pressure on the Fed to cure rates. “
Ultimately, while increasing the debt ceiling may be compatible with a Bitcoin rally of over $ 110,000, historical patterns do not support a direct link caused by the between these events.
This article is for general information purposes and is not intended to be and should not be done as legal or investment advice. The views, attitudes, and opinions expressed here are unique and do not necessarily reflect or represent the views and opinions of the cointelegraph.
