Bitrabo Editorial
Bitcoin is still experiencing a bearish trend, despite the expected US inflation data. This time, the uncertainty affecting the crypto market concerns the US debt ceiling, which is reportedly approaching its limit. As it gets closer, the outlook for risk assets, including Bitcoin, becomes increasingly negative, with the possibility of Bitcoin dropping back to $25,000.
The Impact of the US Debt Ceiling on Bitcoin
The mounting US debt ceiling is significantly affecting not just the cryptocurrency market but also the stock market. Bitcoin has a high correlation with the stock market, which is why it has been falling along with it in such market conditions.
According to Treasury Secretary Janet Yellen, the country will hit its debt ceiling as early as June 1. This leaves a mere two weeks before then, and investors are understandably apprehensive, as breaching the debt ceiling could have disastrous effects on the economy.
It is highly probable that the US will raise its debt ceiling once again, as it has been doing since 1960. Nevertheless, many questions regarding the economy remain unanswered, which is why investors are more likely to play it safe in the meantime.
Risk assets such as stocks and Bitcoin are expected to continue declining until June 1. The decision regarding the debt ceiling will then determine how investors approach the market moving forward, but there is no telling whether the outcome will be positive or negative.
BTC struggling to hold above $26,000 | Source: BTCUSD on TradingView.com
$25,000 is Still a Likely Target for BTC
If the price of Bitcoin continues to decline into next month, the possibility of it hitting $25,000 remains high. Currently, bulls are supporting the price at $26,000, but this support is weak at best. If bears increase their selling pressure even slightly at this point, Bitcoin would be likely to break this support and head back down to $25,000.
Bitcoin trading below its 50-day moving average also indicates a bearish trend. But this is only valid in the short term. For the long-term, the digital asset is still very much bullish, trading above its 200-day moving average.
If bulls are able to hold $26,000 into the new month, then the short-term outlook for BTC will turn bullish, leading to a recovery and another rally in price. If this happens, the cryptocurrency will easily retake the $30,000 level.
At the time of writing, BTC is trading at $26,191, down 2.03% in the last 24 hours, with a 4.30% loss on the weekly chart.