The United States is making progress in raising its debt ceiling, but BlackRock CEO Larry Fink says confidence in the U.S. dollar is waning. This development could potentially be favorable for Bitcoin as it gains attention as an alternative.
Fink’s comments came as the U.S. House of Representatives passed a bill on May 31st to raise the debt ceiling to $31.4 trillion. The bill now awaits debate in the Senate, which is expected to take several days to consider. The U.S. Treasury has set a June 5 deadline for raising the debt ceiling, after which the country risks defaulting on its debt.
During a Deutsche Bank financial services conference, Fink expressed his expectation for at least two more rate hikes by the Federal Reserve in the coming months. He indicated that he had not observed any signs of a decline in headline inflation. Fink also expressed concern that the United States could jeopardize its reserve currency status.
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The recent drama surrounding the debt ceiling has put Bitcoin in the spotlight once again
Many bitcoin and cryptocurrency investor advocates view BTC as a hedge against inflation and debt concerns, especially as central banks continue to increase the overall money supply. The recent drama surrounding the debt ceiling has put Bitcoin in the spotlight once again, as investors may be looking for safe havens with limited supply outside the constraints of the current financial system.
Josh Gilbert, a market analyst at eToro, emphasized that the debt ceiling issue underscores Bitcoin’s utility as it offers an alternative to the traditional financial system. Because of its limited supply, Bitcoin is not exposed to the challenges faced by the U.S. government. However, Gilbert cautioned that while current events may underscore Bitcoin’s value, investors expecting a significant price increase should temper their expectations.
Matteo Greco, research analyst at investment firm Fineqia International, echoed this sentiment, stating that the downward pressure on the bitcoin price is due to investor fears that the U.S. may be nearing the debt ceiling. When central banks raise interest rates, investors typically tend to pull their funds out of risky assets like cryptocurrencies and growth stocks.
Gilbert further pointed out that if Fink’s fears of further interest rate hikes come true, it could lead to a further decline in bitcoin prices. On the other hand, if the Federal Reserve pauses its rate hike cycle in June, investors can expect positive price movement for Bitcoin.
Bitcoin is currently trading at $27,161, down 2% in the last 24 hours and down 6.4% in the last month. These price fluctuations will be closely monitored as events unfold around the debt ceiling.
It is important to note that the bill to raise the debt ceiling still needs to pass the Senate to become law.
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First published in COIN KURIER, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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