Published: April 21, 2023 at 6:13 p.m. ET
The uncertainty around whether the U.S. will raise its debt ceiling before it is hit in coming months has started to rattle some financial markets as it did in 2011, but it might provide a bullish case for bitcoin, according to analysts at crypto investment company NYDIG.
The deadline to raise the U.S. debt ceiling, or the amount of money the U.S. government is authorized to borrow, is approaching faster than expected, according to analysts at Goldman Sachs. It could arrive as early as June, according to the analysts.
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The uncertainty around whether the U.S. will raise its debt ceiling before it is hit in coming months has started to rattle some financial markets as it did in 2011, but it might provide a bullish case for bitcoin, according to analysts at crypto investment company NYDIG.
The deadline to raise the U.S. debt ceiling, or the amount of money the U.S. government is authorized to borrow, is approaching faster than expected, according to analysts at Goldman Sachs. It could arrive as early as June, according to the analysts.
Concerns over the looming deadline are rippling through the Treasury bill market, sending the yield of the 1-month Treasury bill on Friday to its lowest close since October.
Also read: Here’s how anxiety over the U.S. debt ceiling may play out in markets
However, bitcoin
BTCUSD
might find its opportunity to shine during such uncertainty, analysts at NYDIG wrote in a Friday note.
Bitcoin may be seen as “a valid investment option for those seeking to insulate themselves from the machinations of politicians and monetary policy setters,” according to the NYDIG analysts.
Supporters of the crypto have long touted it as a non-sovereign store of value and a hedge against the existing monetary systems.
To be sure, the crypto’s price is still highly volatile and the digital asset market remains largely unregulated.
Bitcoin is trading at around $27,360 on Friday, down about 3% over the past 24 hours, according to CoinDesk data, but it rallied almost 70% so far this year though is still down 60% from its all-time high in November 2021.
In 2011, the last time the U.S. experienced a debt ceiling crisis, the CBOE Volatility Index
VIX
,
often known as the Wall Street’s “fear gauge,” spiked to nearly 50 from around 20, and the S&P 500
plunged 12% to 1,100.
At that time, bitcoin, which was created in 2009, was still “in its infancy,” noted the NYDIG analysts, but now with an over $550 billion market capitalization, bitcoin might see a different story, the analysts said.
