Bitcoin, the largest digital token, experienced a significant surge, reaching its highest level in more than two weeks. The surge in investor sentiment was fueled by a deal on raising the US debt limit, contributing to a broader rally in the cryptocurrency market. Smaller tokens like Ether and Binance Coin also saw gains as a result.
Boost from US Debt Ceiling Agreement
The recent deal on the US debt ceiling between President Joe Biden and House Speaker Kevin McCarthy has positively influenced risk appetite in global markets. As a result, Bitcoin recorded a 3.2% increase on Monday, trading at $28,182 in Singapore. The digital token’s value has been oscillating around its 50-day moving average. However, it is worth noting that the agreement still needs to pass through Congress quickly to prevent a potential US default. Additionally, the recent rise in Treasury yields and speculations about further US monetary tightening could pose additional challenges.
Implications for Risk Assets and Crypto Complex
John Toro, head of trading at digital-asset exchange Independent Reserve, attributed the current positive risk sentiment to the resolution of the debt-ceiling impasse. However, he emphasized that front-end funding costs remain elevated compared to crypto returns, resulting in negative carry for long holders. This ongoing factor may act as a headwind for risk assets and the broader cryptocurrency market.
Bitcoin’s Performance and Recovery
Bitcoin is currently on a five-day streak of gains, marking its best stretch since March. This positive momentum has helped alleviate the difficulties faced by cryptocurrency during a challenging quarter characterized by poor liquidity and increased regulatory scrutiny in the United States. While the crypto markets have partially rebounded from the previous year’s slump, they are still significantly below their record highs, including Bitcoin’s peak of nearly $69,000 in 2021.
Expectations for Bitcoin’s Future
Tommy Honan, head of market analysis at crypto exchange Swyftx, suggests that the relief generated by the debt deal could attract traders back to the market, potentially triggering a substantial increase in the price of Bitcoin. The positive sentiment stemming from the agreement may contribute to the next significant upward movement for cryptocurrency.