After prolonged debates, the Parliament began voting on the debt ceiling law around 4 AM. Bitcoin‘s price rose above $27,300 while the discussions in Parliament continued. The default risk that shook the crypto markets throughout May seems to be diminishing following the 15-minute vote.
US Debt Ceiling Vote
The vote has ended and the debt ceiling law has passed. The debt ceiling agreement, expected to pass smoothly through the Senate as well, now appears to be almost certain. Senate’s swift approval will be necessary before the payments due on June 5. The vote resulted in 314 Yes and 117 No. A significant portion of the No votes came from the Republicans. However, while exceeding the number 218 would have been sufficient, the figure reached 314.
The majority of the House of Representatives approved a bipartisan bill to suspend the government’s $31.4 trillion debt ceiling. The move, made five days before the default risk, was no different from the previous two debt ceiling agreements. We had already written that the agreement would come at the last minute throughout May and that statements made by officials, especially Treasury Secretary Yellen, were exaggerated.
For President Joe Biden to sign the bill into law, it needs to be approved by the Senate, where Democrats are in the majority. Considering the open support of the Democrats, we can assume that the law is complete, as a serious problem is not expected on the Senate side.
Congress’ full approval is required before Monday, June 5, when the Treasury Department’s funds could potentially run out for the first time in American history to pay off its debts.
How Will Cryptocurrencies Be Affected
The default risk was a serious problem for stock markets and was pressuring cryptocurrencies. For now, the price is not rapidly increasing in contrast to the pressure it saw in the event of a possible disagreement. If crypto investors’ risk appetite increases as the uncertainty ends, we may see a further price increase. Experts were talking about serious negative consequences in cryptocurrencies if the law did not pass. At least for now, we can say that this potential threat has been eliminated.
Now, the Fed will need to take action to make Treasury bonds attractive. In the coming period, the debt ceiling agreement’s impact on the markets will be significant in the volatility increase of Bitcoin.
