Cryptocurrencies climb as U.S. debt deal heads to Congress

The deal will now be put before the Congress for a vote, if approved it will prevent the U.S. government from defaulting on its debt

Bitcoin and Ethereum continued to jump along with stocks as U.S. lawmakers ended their deadlock over the government’s debt ceiling, improving risk-on sentiments in the market.

Bitcoin hit $28k Monday morning, with Ethereum surpassing $1,900. At one time, Bitcoin sat at just below $28k, 2.9 per cent higher on the day, with Ethereum staying above $1,900, 3.2 per cent higher during the past 24 hours, according to CoinGecko.

A prolonged stalemate between Democrats and Republicans over the federal government’s $31.4trln debt ceiling seemed to end this past weekend, as U.S. President Joe Biden and Republican House speaker Kevin McCarthy reached a tentative deal Saturday evening.

The deal will now be put before the Congress for a vote; if approved it will prevent the U.S. government from defaulting on its debt.

In exchange for carrying out spending limits and making cuts to government programs, the deal would extend the shelving of the debt ceiling until January 2025.

The stock markets held on to the past week’s impressive gains at the possibility of a formal deal, with the S&P 500 futures hitting a nine-month high above the 4,220 mark and the Nasdaq-100 index futures opening with a positive gap above 14,400 points—a 14-month high—on Monday.

Meanwhile, the price of gold has declined since the past week as the lawmakers worked toward preventing a default on the American economy, reinforcing the dollar’s value. Gold was last trading at $1,941 per ounce, 2.45 per cent lower from the monthly opening value.

The next vital market moving event from the U.S. economy will come two weeks from now at the Fed policy rate meeting to be held on June 14-15.

At present, CME traders are placing a 65 per cent bet, according to the CME FedWatch tool, that the central bank will hike the benchmark rate once more, dashing expectations that May’s 25bps rate raise was the last one for 2023.

Earlier, rate raises have put selling pressure on Bitcoin as higher dollar yields make risk-on assets such as Bitcoin and stocks unappealing.