Blackrock CEO Laurence Fink believes the recent “drama” around the United States debt ceiling has deteriorated global trust in the U.S. dollar, something that other analysts predict could provide some tailwinds for Bitcoin (BTC $26,781).

Fink’s comments came as U.S. House of Representatives on May 31 passed a highly-anticipated bill to lift the $31.4 trillion debt ceiling. The bill now goes to the Senate, which is expected to spend a few days debating it. The U.S. Treasury has indicated that the deadline for raising the debt ceiling was June 5. Any later, the country could begin defaulting on its debts.

According to a May 31 report by Reuters, Fink told the attendees of a Deutsche Bank financial services conference that he expects at least two more interest rate hikes from the Federal Reserve in the coming months, claiming that he’d seen “no evidence” of overall inflation being reduced.

I believe we’ll have a resolution, ... but let’s be clear, the United States is jeopardizing its reserve currency status.

Many Bitcoin advocates and cryptocurrency investors see BTC as a hedge against inflation and debt fears brought on by central banks increasing overall monetary supply.

Josh Gilbert, a markets analyst with eToro, told Cointelegraph that the debt ceiling drama brings Bitcoin into the spotlight once again, as investors may seek finite-supply safe haven assets outside the constraints of the current financial system.

“The debt ceiling deal once again highlights Bitcoin’s utility because it’s essentially a break away from the traditional financial system. Given its finite supply, it’s free from the issues that the U.S. government is facing right now,” he said.

Still, Gilbert notes that while the U.S. banking crisis and the debt-ceiling debacle highlights the inherent utility of an asset like Bitcoin, any investors hoping for current events to provide a massive surge in the value of Bitcoin should tone down their expectations.

“There’s more fear than optimism in the short term due to the uncertainty of these issues and the liquidity problems they will cause,” Gilbert said. “When the banking crisis happened, it dialed down inflation and rate hike expectations, which is why we saw Bitcoin rally.”

These sentiments were echoed by Matteo Greco, a research analyst at investment firm Fineqia International, who told CNBC that the current downward pressure on Bitcoin’s price is due primarily to investor fears of the U.S. reaching the debt ceiling.

Typically when central banks raise interest rates, investors choose to take their money out of risky assets like cryptocurrencies and growth stocks.

“Given Bitcoin was so depressed in 2022, the expectations of this high-interest rate environment changing saw investors take an opportunity to buy Bitcoin at heavy drawdowns. Rate hike expectations have changed significantly so far this year and in the last few weeks,” Gilbert added.

On Gilbert's assessment, if Fink’s fears of further rate hikes come true, this could see the price of Bitcoin fall further from its current price. If the inverse happens, and the Federal Reserve pauses its rate hiking cycle in June, Gilbert says that investors can expect to see some positive price action for Bitcoin.

Chart

The price of Bitcoin over the last year. Source: Cointelegraph Price Index.

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. 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Ripple rides RWA narrative with Archax collaboration, XRP extends seventh day of losses to 8%

Ripple rides RWA narrative with Archax collaboration, XRP extends seventh day of losses to 8%

Ripple announced that the payment remittance firm extended its collaboration with FCA regulated digital securities exchange Archax. The collaboration is focused on Real World Asset tokenization, an emerging narrative in the ecosystem. 

More Ripple News

ONDO extends gains despite surge in profit-taking

ONDO extends gains despite surge in profit-taking

ONDO, the governance token of Ondo Finance, trades in the green on Friday, defying the effects of a surge in profit taking from large-wallet investors following the 76% gains seen in the past 30 days. 

More ONDO News

Monero price poised for a downward correction

Monero price poised for a downward correction

Monero (XMR) price has encountered resistance at a critical level. The technical outlook suggests a potential short-term correction as momentum indicators signal a bearish divergence.

More Cryptocurrencies News

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Bitcoin braces for potential short-term correction

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Bitcoin braces for  potential short-term correction

Bitcoin price daily candlestick closes below the weekly support level of $67,147. Ethereum price is weakening and could retrace to its immediate support at $3,321. Ripple price fails to close above the 50-day Exponential Moving Average.

More Cryptocurrencies News

Bitcoin: Has BTC found a local price bottom?

Bitcoin: Has BTC found a local price bottom?

Bitcoin (BTC) price looks set for a mild fall this week, weighed by slight outflows in the US spot ETFs and the US Federal Reserve (Fed) keeping a hawkish interest-rate outlook despite easing inflation. Technical indicators suggest that BTC could face a further 5% correction in the short term before resuming the uptrend.

Read full analysis

BTC

ETH

XRP