Blackrock CEO Issues Dire Warning About ‘Debt Ceiling Drama’ – Bullish for Bitcoin?

BlackRock CEO Lawrence Fink believes that the recent “drama” surrounding the US debt ceiling has reduced global confidence in the US dollar, with some other analysts predicting some tailwind for bitcoin (BTC). can provide. ,

Fink’s comments came as US lawmakers passed a long-awaited bill on June 1 to lift the $31.4 trillion debt ceiling. The US Treasury Department indicated that the deadline for raising the debt ceiling was June 5.

According to a May 31 Reuters report, Fink told attendees at the Deutsche Bank Financial Services Conference that he expected at least two more rate hikes from the Federal Reserve in the coming months, claiming that he predicted headline inflation. had seen “no evidence” of a reduction.

“I think we will have a solution, … but let’s be clear, the United States is jeopardizing its position as the reserve currency.”

Many bitcoin supporters and cryptocurrency investors view BTC as a hedge against inflation and debt concerns caused by increases in the total money supply by central banks.

Josh Gilbert, a market analyst at eToro, told Cointelegraph that the debt ceiling drama is putting bitcoin back in the spotlight as investors may seek a safe haven asset with a limited supply outside the constraints of the current financial system.

“The debt ceiling protocol once again highlights the utility of bitcoin, as it is essentially a break from the traditional financial system. Given its limited supply, it is free from the problems currently facing the US government,” They said.

Still, Gilbert notes that while the US banking crisis and debt-limit debacle highlight the underlying utility of an asset like bitcoin, investors hoping current events will drastically increase bitcoin’s value should temper their expectations. .

“There is more fear than optimism in the near term because of the uncertainty of these issues and the liquidity problems they create,” Gilbert said. “When the banking crisis hit, expectations for inflation and interest rate hikes fell, which is why we saw bitcoin rise.”

These sentiments were echoed by Matteo Greco, a research analyst at investment firm Finekia International, who told CNBC that the current downward pressure on bitcoin’s price is primarily due to investor fears that the US will hit the debt ceiling.

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When central banks raise interest rates, investors usually choose to move their money out of riskier assets like cryptocurrencies and growth stocks.

“Since bitcoin was so bearish in 2022, the anticipation of this changing environment with higher interest rates caused investors to buy bitcoin with huge exits. So far this year and expectations for rate hikes have changed significantly in recent weeks,” Gilbert said.

According to Gilbert, if Fink’s forecast of a further rate hike comes true, then the price of bitcoin could fall further from its current price. If the opposite happens and the Federal Reserve halts its rate hike cycle in June, Gilbert says investors can expect positive price action for bitcoin.

Bitcoin price over the past year. Source: Cointelegraph Price Index.

According to Cointelegraph Price Index data, bitcoin is currently changing hands at $27,161, down 2% over the past 24 hours and 6.4% over the past month.

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