The debt ceiling for the United States is one step closer to being raised, but according to Larry Fink, confidence in the currency is declining, which may be good for Bitcoin.
The current “drama” over the US debt ceiling, according to Blackrock CEO Laurence Fink, has damaged confidence in the US dollar internationally. Fink’s comments are in line with those of other analysts who assert that this might ultimately be advantageous for Bitcoin.
A plan to raise the $31.4 trillion debt ceiling was approved by the House of Representatives on May 31st and is now pending consideration by the Senate. To prevent a debt default, the U.S. Treasury has set a deadline of June 5 for lifting the debt ceiling.
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Fink expressed his forecast that the Federal Reserve will increase interest rates by at least two more times in the upcoming months at a conference on financial services sponsored by Deutsche Bank. He indicated that he had observed “no evidence” of a decline in overall inflation, suggesting that he thought additional rate increases might be required.
The potential for alternative assets like Bitcoin to acquire favor as a hedge against such uncertainty is highlighted in Fink’s assessment of the effect of the debt ceiling crisis on international confidence in the U.S. currency. The effects on the American economy and the global financial system will be widely watched as the debt ceiling dispute develops.
There are a few reasons why Bitcoin could benefit from the debt ceiling drama.
- Uncertainty: The debt ceiling debate is creating uncertainty in the financial markets. This uncertainty could lead investors to seek out alternative assets, such as Bitcoin, as a safe haven.
- Inflation: The debt ceiling debate could lead to higher inflation. This is because the US government may be forced to print more money to pay its bills. This could lead to a decline in the value of the US dollar, which could make Bitcoin more attractive to investors.
- Regulation: The debt ceiling debate could lead to increased regulation of the cryptocurrency industry. This could make it more difficult for investors to buy and sell Bitcoin on traditional exchanges. This could lead to increased demand for Bitcoin on decentralized exchanges, which could boost the price of Bitcoin.
Of course, it is also possible that the debt ceiling drama will have no impact on Bitcoin. However, the potential for Bitcoin to benefit from the debt ceiling drama is certainly worth keeping an eye on.
According to Gilbert, the price of Bitcoin might decrease further from its current price if Fink’s worries about more rate hikes are realized. Gilbert adds that investors should anticipate some good market activity for Bitcoin if the opposite occurs and the Federal Reserve decides to halt its cycle of rate increases in June.
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Bitcoin is currently changing hands for $27,161, down 2% in the last 24 hours and 6.4% over the last month according to data from Cointelegraph Price Index.