Cryptocurrency prices experienced a boost over the weekend as the likelihood of a debt default in U.S. history seemed less probable. Both Republican House Speaker Kevin McCarthy and President Joe Biden have been inching closer to a finalized deal on America’s debt ceiling, and assessing the support they would need to pass legislation this week, according to the Associated Press. As a result, Bitcoin climbed 2.9% over the past day to around $27,500, and Ethereum was up 1.4% to around $1,850, with both coins posting gains of 2.5% over the past week.
Some alternative coins, including Cardano and Solana, also saw even bigger gains, rising 3.4% and 5.2%, respectively. However, Tron’s TRX was the only top-20-coin by market capitalization to experience a decline, falling 0.4% to $0.076 over the past day, but still performing well overall for the week.
The stakes are high as America’s financial reserves start to dwindle, with Treasury Secretary Janet Yellen warning of an “economic catastrophe” if the U.S. failed to raise the debt ceiling in time. The ongoing disagreement between Democrats and Republicans has carried on for weeks, as the country rapidly approaches the “X-date” – the point at which the government can no longer meet its debt obligations. This day could come as early as June 1, according to Yellen.
While the exact details of the debt ceiling bill are unclear, one sticking point was the protection of “wealthy tax cheats and crypto traders,” which Biden claimed should not be included in a deal. However, McCarthy stated that the compromise “doesn’t get everything everybody wanted,” according to the Associated Press.
Last week, analysts told Decrypt that a default was unlikely, citing previous debt-ceiling debacles that culminated in last-minute deals, such as in 2011. However, a potential drawback is that crypto prices could slide as investors turn to safe-haven assets like the dollar during periods of market stress.
As June 1 approaches, uncertainty remains regarding Washington’s ability to finalize an agreement on time and the potential impact this could have on markets. For now, it appears that the cryptocurrency market is factoring in some confidence on the bipartisan front. While this brings a sense of relief to crypto enthusiasts, the community should remain vigilant and informed about the ongoing situation in order to prepare for any potential market fluctuations resulting from political decisions.