Bitcoin’s Bullish Breakout Amid US Debt Ceiling Standoff and Inflation Fears

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Despite the ongoing market uncertainties, margin and futures markets for Bitcoin have started to indicate a potential bullish breakout. Currently, the primary resistance level for Bitcoin remains at $27,500, with the ongoing U.S. debt ceiling standoff standing as one possible factor constraining its growth. Some experts argue that this standoff is nothing more than a ‘show’ and that additional funds will eventually enter the market.

As the U.S. government struggles to get Congress to approve a debt limit increase, global inflationary pressures continue to mount. Bitcoin’s digital scarcity offers an attractive alternative investment in light of future budget constraints and increasing debt interest payments.

Throughout this period of uncertainty, Bitcoin’s price has risen above $27,000, while the value of gold has witnessed a 2.5% drop, reaching its lowest levels in 45 days. Concurrently, the U.S. Dollar Index (DXY) experienced a two-month high on May 18, suggesting confidence in the U.S. currency relative to global currencies. However, this doesn’t necessarily equate to confidence in the government’s ability to avert a shutdown, particularly as global economies would be significantly impacted in the event of a U.S. debt default.

Despite these troubling outlooks, several markets have displayed resilience due to recent positive macroeconomic data. For instance, China’s retail sales demonstrated an 18.4% year-over-year growth in April, while the Eurozone’s first quarter GDP increased by 1.3%. Furthermore, the U.S. retail sales growth came in at 0.5% year-over-year for April, not as high as initially hoped but still an indicator of growth.

Market analysis of both Bitcoin derivatives and margin trading metrics reveals that professional traders are cautiously maintaining a bullish stance. The recent increase in margin lending ratios and the futures long-to-short metric for exchanges demonstrates a higher level of bullish positioning among professional traders.

Notably, the current market structure for Bitcoin is particularly bullish, in light of the low level of demand from short-sellers and the lack of excessive leverage from buyers. If the U.S. debt ceiling standoff continues, it would favor a Bitcoin rally toward the $28,000 mark.

Though the future remains uncertain, Bitcoin serves as a hard asset that may provide security from the upcoming financial pressures. However, it is essential to remember that

Source: Cointelegraph

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