Bitcoin Holds Steady At $27K Despite US Debt Default Concerns! Here’s The Next Level For BTC Price

Bitcoin Holds Steady At $27K Despite US Debt Default Concerns! Here’s The Next Level For BTC Price

Time Stamp: May 22, 2023 3:46 PM
Source Node: 2104049

Global financial markets are anxious about potential fallout from a US debt default. Meanwhile, Bitcoin, the leading cryptocurrency, remains steady, maintaining momentum around $27K, creating ambiguity about its next steps amid economic turmoil. As talks remain at a standstill over raising the US government’s $31.4 trillion debt ceiling, stirring financial market jitters, some analysts are breaking away from popular opinion. They warn that a potential agreement could cause a downturn in the cryptocurrency market.

Bitcoin Settles In A Tightest Price Range

Glassnode, an on-chain analytics company, reports a significant lull in crypto market activity recently. Despite anticipated market fluctuations, Bitcoin, the largest cryptocurrency by market cap, has maintained a remarkably consistent price range for several months.

The graph indicates a 3.4% difference between the highest and lowest prices from the week leading up to May 21. This noteworthy stability persists even amidst ongoing worries about the soundness of U.S. regional banks and the nation’s debt ceiling.

When the debt ceiling is eventually raised, the Treasury is expected to replenish its cash reserves by issuing more government bonds. This could potentially drain liquidity from the system and apply upward pressure on bond yields. As increased issuance often leads to lower prices and higher yields, Bitcoin (BTC), which typically moves counter to bond yields, might be affected.

So, while an agreement could alleviate significant economic uncertainty, assets such as Bitcoin, which lack ties to the tangible economy and rely heavily on fiat liquidity, may actually face challenges.

According to several commentators, Bitcoin attracted safe-haven investments during the banking crisis in March, while other interest rate-sensitive assets like tech stocks also thrived, as traders anticipated early Federal Reserve moves towards rate reductions. Essentially, Bitcoin continues to be a risk asset predominantly influenced by liquidity.

What To Expect From BTC Price Next?

Bitcoin has been experiencing limited price fluctuations in recent days. Typically, such restricted ranges are succeeded by an expansion in range, leading to pronounced trending movements. Glassnode observed that Bitcoin’s seven-day price range is similar to situations in January 2023 and July 2020, both periods that were followed by significant market shifts.

The bears have effectively protected the 20-day EMA, yet failed to drive the price down to the key support at $25,000, implying that bulls are capitalizing on minor price drops. BTC price is currently trading at $26.8K, declining over 0.21% in the last 24 hours.

As long as the price remains above the immediate support of $26,358, the bulls will strive to propel the price back into the symmetrical triangle pattern. Success in this could imply market rejection of lower levels, potentially enhancing the chances of a rally to the resistance line, which might again pose a significant challenge for the bulls.

In contrast to this scenario, if the price dips and breaches the $26,358 mark, it would suggest a supply surplus. This could then cause a potential drop to the critical $25,500 level.

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