Bitcoin Price Climbs To $28,200 – US Debt Ceiling Deal Catalyst To New Highs?

May 29, 2023 anon Market Analysis
Coinmama
Bitcoin Price Climbs To $28,200 - US Debt Ceiling Deal Catalyst To New Highs?
Coinmama

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Bitcoin (BTC) price turned bullish over the weekend to record an intra-day high of $28,261 on May 28. Notably, this was the first successful retest of the $28,000 level since May 10 and comes with the right catalyst.

On May 27, United States President Joe Biden directed both House and Senate to pass the debt ceiling deal immediately. This was after a 90-minute call with House Speaker and Republican Kevin McCarthy.

Bitcoin Price Surges After Biden And McCarthy’s ‘Agreement In Principle’

Bitcoin (BTC) price is up almost 10% since Saturday, May 27 after US President Biden and Republican McCarthy engaged in a one-and-a-half-hour call. Reportedly the two political leaders reached an “agreement in principle” to raise the $31.4 trillion debt ceiling.

Binance

The decision came amid growing fears of a potential default by early June. The call, which almost lasted two hours, ended with Biden and McCarthy reaching a tentative agreement. They agreed to raise the federal government’s multi-trillion-dollar debt ceiling according to a Reuters report, which cited two sources familiar with the matter.

The drive to reach the agreement was fueled by the need to prevent the US from facing a “catastrophic default.” President Biden acknowledged that the deal would go to the US House and Senate “over the next day,” likely Monday, May 29. Nevertheless, the head of state urged the two chambers to “pass the agreement right away.”

House Speaker Kevin McCarthy of the Republican Party also confirmed the agreement in a Twitter post. However, he blamed Biden for the delayed response, saying, “[Biden] wasted time and refused to negotiate for months.”

Implications Of Debt Ceiling Deal Passing

Any knowledgeable market analyst will tell you that the agreement is set to limit the United States government’s spending for the next two years. This, however, will exclude expenses related to national security. The postulation is certain, despite there being no exact details of the deal as of the time of this publishing. In a statement, a source whose identity remains anonymous for obvious reasons said:

Negotiators have agreed to cap non-defense discretionary spending at 2023 levels for one year and increase it by 1% in 2025.

As a refresher, it is worth mentioning that the news comes only weeks after US Treasury Secretary Janet Yellen’s forewarning. She warned of a default risk possibility as soon as June 1 if the debt limit was not postponed or raised. The US Congressional Budget Office (CBO) also released a report on May 12 underscoring the Treasury Secretary’s appeal for Congress to “act as soon as possible.” In her words, “the government would no longer be able to pay all of its obligations at some point in the first two weeks of June if the debt limit remained unchanged.”

Capital Inflow Into Bitcoin Fuels Uptick Across Crypto Market

There has been a massive inflow of capital into Bitcoin following the debt ceiling development, inspiring a bullishness across the crypto market.

Influence of det ceiling deal on Bitcoin
Source: CoinMarketCap

This is well evidenced in the price surge, with Bitcoin price recording a 3.05% increase on the day. Notably, it is up almost 10% since May 27 despite the overall bearishness in the industry and lack of momentum. The price surge brings to life assertions by former Wall Street trader Macrojack concerning the importance of owning hard assets. Based on his analogy, the USD would be “printed into oblivion,” but Bitcoin remains the best bet.

It also reaffirms the proposal made by Onramp Chief Operational Officer (COO) Jesse Meyer, who said that BTC would become the ultimate “winner during the last round of stimulus,” akin to the case during the Covid-19 Pandemic.

Based on Meyer’s assertions, raising the debt ceiling would motivate the Federal Reserve to print more money, increasing supply. Based on demand-supply dynamics, this would be bearish for the dollar but bullish for Bitcoin because the two financial assets trade inversely.

Assessing The Possibility Of Bitcoin Price Maintaining Current Bull Trend

Bitcoin (BTC) price is trading with a bullish bias after a breakout on Thursday, May 25, as discussions about the debt deal intensified. This came as the June 1 deadline by Secretary Yellen drew near. Nevertheless, the king crypto’s bull run has met the 50-day Simple Moving Average (SMA) at $28,189, which made the next hurdle at $28,430 formidable, limiting the BTC growth potential.

Nevertheless, bulls remain strong, as indicated by the Parabolic SAR after it flipped below Bitcoin price On May 28. The market favors the upside whenever this trend-following indicator tracks an asset’s price from below. Therefore, an increase in buying pressure could see BTC break above the $28,430 barricade and target the $30,658 resistance level next. Bulls flipping this level into support could begin the next bull run.

Investors should wait for confirmation, though, which would be indicated by a decisive daily candlestick close above the $28,430 level.

In the meantime, Bitcoin price enjoys robust support downward, presented by the 100- and 200-day SMA at $26,779 and $22,879, respectively. Reinforcing the case for the bulls further, the Relative Strength Index (RSI) was still above the midline at 55. This, coupled with the Awesome Oscillators (AO) indicator flashing green and drawing toward the positive zone, suggested that bulls were leading the charge.

Bitcoin Price Debt Ceiling
TradingViewChart: BTC/USDT 1-Day Chart

On the other hand…

Besides the debt ceiling agreement, and the fact that it is still subject to congressional approval, there is still no sufficient momentum to sustain the uptrend. This explains why Bitcoin price remains stagnant below the $28,430 barricade.

Buyer momentum could fail to overpower selling pressure from the bears as greedy retailers book early profits after breaking even. Accordingly, Bitcoin price could execute a reversal. Such a move could see BTC drop below the support offered by the 100-day SMA at $26,779 before a leg down into the psychological $25,000 zone. In a dire case, BTC could break the $24,000 support level.

In the latest development around the debt ceiling theme, McCarthy has indicated that the debt ceiling deal is 95% popular with House Republicans. This means it would most certainly attract support. Similarly, Biden has said that he is confident the deal will get to his desk, as “there were no sticking points to be hammered out.”

BTC Alternative

Shift attention from Bitcoin and the entire debt ceiling deliberation and consider WSM, the native asset of the Wall Street Memes ecosystem. This project is making headlines, with analysts predicting a 10X crypto presale. And rightfully so! The meme coin was launched on May 25, taking off swiftly to raise an astounding $100,000 in only a few hours. According to the official website, the project boasts a raise upwards of $90.277 USDT out of the $1.006 million target set for stage one of the presale.

Notably, there are only around three days left to the next stage. This leaves investors with a narrow window to buy WSM tokens at discounted rates of $0.0253 per token. Afterward,  the price will rise to $0.0256 in the next stage of the presale.

The initiative was also inspired by the 2021 GameStop bull run. This was when Reddit ordinary investors banded together to buy back GameStop stock from institutional short sellers. Numerous well-known people, including Elon Musk, have expressed interest in it.

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