Bitcoin (BTC-USD) charts revealed two bullish signals after US treasury secretary Janet Yellen warned the US could be “out of cash and unable to pay its bills by early June”.
Bitcoin was trading flat at $27,578 (£21,854) on Tuesday.
In the past two days, bitcoin reserves across all cryptocurrency exchanges have fallen, according to data from CryptoQuant.
This could suggest investors are taking their digital assets off exchanges and transferring them to cold storage, in order to hold in speculation that prices will rise.
Read more: Crypto live prices
Another bullish price movement indicator comes from the CoinDesk Bitcoin Trend Indicator (BTI) that shows long-term holders continue to increase their bitcoin holdings.
Since 31 March, the 30-day change in long-term supply, defined as coins held for 155 days or more, has been trending upward, indicating bullish sentiment and dormant supply.
The BTI shows that bitcoin is in an uptrend, with prices up 68% year-to-date.
It comes as US treasury secretary Janet Yellen said that failure to raise the US debt ceiling could have dire consequence for the national and global economy.
Yellen told ABC News on Sunday that if the US federal government fails to reach an agreement on raising its borrowing limit, it could face a shortage of funds by early June.
Consequently, the government may struggle to make payments for wages, welfare, and other obligations.
Yellen said: “If the debt ceiling is not raised by June the Treasury would then find itself in the position where it is unable to pay all of the bills that are due that day, and this would be the first time in the history of America that we would fail to make payments that are due.
“Whether this is to default on interest payments or payment for social security recipients, we would simply not have enough cash to meet all of our obligations, so it is widely agreed that financial and economic chaos would then ensue.”
“It’s Congress’s job to do this and if they fail to do it, we will have an economic and financial catastrophe that will be of our own making,” she added.
Watch: Belgium’s digital minister: EU plans to ‘bring order to crypto’ and create its own blockchain | The Crypto Mile
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