Crypto Michael, a digital asset trader, and YouTuber, in his recent video, analyzed the impact of the US debt ceiling on the leading cryptocurrency Bitcoin. He pointed out that the US debt is “getting quite steep”, reflecting on its increase from 15 trillion to 31 trillion in the last 8 years.
Michael began his narration with a brief definition of the debt ceiling. He stated:
Debt ceiling is a legislative limit on the amount of national debt that the US Government can accumulate…It’s essentially a cap of the total amount of money that the US government is allowed to borrow as its debt to fund its operations and meet its financial obligations.
Notably, the debt ceiling system was introduced in 1917 to allow the government to work easier, meeting its expenses without turning to Congress all the time. Michael pictured certain occasions in the past when the debt ceiling breached and the Congress was forced to implement “extraordinary measures to manage the government’s finances”.
Michael asserted that in the past, there have been many examples to showcase the breaching of the US debt ceiling, which arose from factors including the government’s tax revenues and the interest rate hikes by the Federal Reserve. He also pointed out that if the debt ceiling is breached, it would be impossible for the government to make any payments, leading to the US entering into a default for the first time in history.
While talking about the impact of the US debt ceiling on the Bitcoin Price action, he stated:
If the DXY starts to show weakness and if the NASDAQ starts to turn around in a negative way if gold starts to bounce up, I think, Bitcoin will move along, but that’s just a very susceptive case.
He added that if the market goes panic at this point, Bitcoin would go down. He also foreshadowed a situation when the country would immerse into a bulky debt, leading to an ultimate deflation.
