Will the U.S. default on its debt come June 1? This is the question many are asking. The facts on the ground don’t look so good. House Speaker Kevin McCarthy had unfruitful talks with Biden on May 22, further reinforcing the fears investors have. Yellen has said the stock market may crash by 45%+ if the U.S. defaults. Bitcoin is not reacting well to this news, even though investors believe when an economic crisis happens, BTC will be a safe haven.
Here is a recap of last week’s analysis and the forecast for next week.
Bitcoin was holding up well last week due to the support that had formed at the $26,500 range. But as seen in last week’s analysis, the asset was recoiling and preparing to spring either up or down – there was no definite direction.
On the upper side, the 50-day EMA was acting as a strong resistance, while on the bottom side, the $26,500 support was not letting up. The tension was building.
Bitcoin this Week
Bitcoin broke down from the zone of consolidation, a pretty bearish move. The 50-day EMA has been acting as a very effective resistance so far. The bears may have won this round as the BTC price slid below $26,500 and closed the day below this support zone.
The next support is at the 200-day EMA, right around $24,900.
Bullish Catalyst: The U.S is running out of money
Treasury Secretary Janet Yellen said Wednesday that “it seems almost certain” that the United States would not make it past early June without defaulting. In case you are behind the news, the United States is $31.4 trillion in debt (and counting) and it is required to clear this debt before June 1, 2023.
However, the government coffers only have about $60 billion (not factoring in government spending – it could be a lot less than that by now). This means if Biden doesn’t sign off on raising the debt ceiling, he will be the first president in American history to default. If the government defaults, a lot of nasty things will happen. Read more about it here:
The US Debt Ceiling Crisis And Its Potential Impact On Bitcoin And Other Cryptocurrencies
With just a week to go and Biden riddled with international meetings, McCarthy will not be able to meet with Biden again (in person) until after the June 1 deadline. McCarthy confirmed this but also said it was possible they could have conference calls. The outlook is grim for the U.S.
If they raise the debt ceiling, they have to raise interest rates, which will hurt businesses and Americans. If they don’t raise the debt ceiling, the entire U.S. economy crashes and it will hurt Americans. Either way, there is pain.
The question is what is in their (the elite’s) best interest? (Note: Not in the best interest of the American Citizen).
DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decisions based solely on what you read here.
Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.