Bitcoin’s price briefly fell below the $26,000 level on May 25 as investors panicked over political bias in debt ceiling talks. Fitch Rating placed the US “AAA” credit rating on a negative waiting list as US President Joe Biden and Republican debt ceiling talks failed to turn bipartisan.
The crypto market cap slides 2% more on Thursday to extend the decline this week. The global crypto market cap is now reaching less than $1.10 trillion, with top altcoins such as Ethereum, XRP, Cardano, Polygon, and Solana all but breaking through key support levels.
Fitch may downgrade the US rating to negative amid debt ceiling deadlock
Credit rating agency Fitch placed the United States’ “AAA” Long-Term Foreign-Currency Issuer Default Rating (IDR) at Rating Watch Negative. Fitch said it will downgrade if President Joe Biden’s administration and Republicans in Congress don’t raise or spend the debt limit before June 1.
Treasury Secretary Janet Yellen warned that the US Treasury will run out of money on June 1. The Treasury’s general account fell from $316 billion earlier in May to $57 billion, with an opening balance of $636 billion this fiscal year.
Fitch’s downgrade will affect debt securities, Treasury bills and the country’s post-default rating. An S&P downgrade of the US rating in 2011 triggered other downgrades and a massive sell-off in the stock markets.
“However, we believe that risks have increased that the debt limit will not be raised or suspended before the X date and that, as a result, the government could miss payments on some of its obligations.”
The Asian stock market opened lower on rising risks of default on US debt and short Treasury funds this week. While House Speaker Kevin McCarthy is confident in a deal before the June 1 deadline, the sell-off has already begun due to the expiring debt ceiling.
Meanwhile, the US dollar surges above its 2-month high and the US Dollar Index (DXY) rises above 104. The likelihood of a pause in the US Fed rate hike in June continues to decline, according to CME FedWatch Tool.
Also Read: Terra Classic developer L1TF works on USTC Repeg to $1 after parity upgrade
Bitcoin price below the 200-WMA
BTC price is expected to end the week below the key 200-WMA. A huge sell-off will follow if the price does not recover before the end of the week. BTC price is currently trading near the USD 26,000 level and ETH price broke below USD 1800.
Veteran trader Peter Brandt warned crypto investors that BTC price likely to drop below $25,000 until next support at $24.8,000
Also Read: Stocks And Crypto Could Crash Within Weeks Of Debt Ceiling Deal; This is why
Varinder has 10 years of experience in the Fintech sector, with more than 5 years dedicated to blockchain, crypto and Web3 developments. A technology enthusiast and analytical thinker, he has shared his knowledge of disruptive technologies in more than 5,000 news stories, articles and newspapers. With CoinGape Media, Varinder believes in the enormous potential of these innovative future technologies. He is currently covering all the latest updates and developments in the crypto industry.
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This post Bitcoin, Crypto Slip As Fitch Makes US Assessment Negative On Relinquishing The Debt Ceiling
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