Bitcoin’s (BTC) price bull run towards $28,000 on Oct. 1 was partially fueled by the uncertainty regarding the United States debt limit. However, the U.S. President Joe Biden signed the spending bill just hours before the Sept. 30 deadline, avoiding a government shutdown.
Investors now question if the momentum remains favorable for cryptocurrencies given that the worst-case political-economic scenario is no longer on the table. However, it is worth noting that this bill merely provides extra funding for the next 45 days, giving more time for the House and Senate to work on their funding plans for 2024.
At first glance, it might be tempting for investors to use futures contracts to go long on Bitcoin. However, there’s a significant risk of getting liquidated if the price suddenly drops, and it’s impossible to predict whether a successful budget discussion down the road will benefit cryptocurrencies.
With the current extension in place, now, lawmakers need to find a solution before Nov. 17. According to Margaret Spellings, the President and CEO of the Bipartisan Policy Center:
“We can’t continue postponing our fiscal health and negotiating on the brink of government shutdowns and debt defaults.”
There’s no doubt that, despite narrowly avoiding a crisis, the overall risk of an economic recession remains. The U.S. Federal Reserve is grappling with persistent inflation and rising energy prices, factors that have driven the S&P 500 to its lowest point in 110 days and pushed the 10-year Treasury yield to levels not seen since October 2007.
Additionally, oil prices have surged to $90, marking a 27.5% gain in just three months. This upward pressure on inflation is expected to further constrain economic activity.
On Sept. 27, Minneapolis Fed President Neel Kashkari expressed uncertainty about whether interest rates have been raised sufficiently to combat this price growth.
Bitcoin’s initial reaction does not guarantee a bullish momentum
Amid all this turmoil, Bitcoin has increased in value, breaking through the $28
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Author: Marcel Pechman
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