AssetsMay 22, 2023

Will the US go bankrupt? Decisive days are coming not only for the cryptocurrency market

The world's largest economy is in serious trouble. How could this affect digital currencies?

American President Joe Biden continues to fight against cryptocurrencies, comparing investors in this innovative financial sector to tax fraudsters. However, he knows that the Federal Government has a knife at its throat and must quickly find an appropriate solution to deal with the record debt, which in the first quarter of 2023 additionally increased by over USD 148 billion.

Time is running out, there is no solution on the horizon

The US government is running out of time and must reach an agreement on the debt ceiling by June 1, 2023 or face insolvency. This could start a huge chaos in the international financial market and, as a consequence, cause a catastrophic collapse in the American and global economy. Federal offices will most likely be left without money. This is a direct threat to 8 million jobs. There is a high risk of a recession and problems with the payment of pensions for millions of American citizens.

To remedy this catastrophic scenario, the federal government would have to reach an agreement that would, among other things, raise the federal debt ceiling to $31.4 trillion. However, it is worth being aware that at the G7 summit of nations, President Joe Biden said that as the head of the US, he would under no circumstances accept a deal that raises the debt limit, which he believes protects wealthy tax evaders and cryptocurrency dealers, and additionally jeopardizes the ability to deliver food aid for approximately one million US citizens.

Not without significance is the fact that this is not the first time that Joe Biden has attacked investors in the digital currency sector to reject the Republican budget proposals. Some time ago, Joe Biden wrote on his Twitter account that American officials should vote against tax loopholes, which consequently generate about $18 billion in profits for wealthy investors related to the digital currency industry.

Currently, cryptocurrency investors should not lose sight of the fact that there are other significant market events coming this week that may have an impact on the price of a single BTC coin. Specifically, it is about the US GDP revision, documents from the last FOMC meeting, as well as core PCE inflation.

Will Bitcoin be the hope of investors?

At the beginning of the year, when US banks collapsed one by one, Bitcoin held its ground solidly. This situation may make investors and traders aware that Bitcoin is currently a much more attractive investment alternative. Analysts associated with the crypto asset industry expect that if US legislators fail to raise the level of permissible debt, the stock exchanges will collapse and the price of the oldest cryptocurrency will skyrocket. It is worth noting that the latest Bloomberg Markets Live Pulse survey selected assets such as gold, US Treasuries and BTC as the top three assets that would be a safe haven in the event that the US was unable to repay its debt in international financial markets.