Crypto Inches Bit Higher As US Senate Agrees to Raise Debt Ceiling, What’s Ahead?

On Thursday, the U.S. Senate finally passed the bipartisan legislation to raise the US debt ceiling further from $31.4 trillion, thereby averting the possibility of a default. The Senate voted 63-36 to approve the bill.

On Thursday, Senate Majority Leader Chuck Schumer said: “We are avoiding default tonight”. Furthermore, President Joe Biden added: “This bipartisan agreement is a big win for our economy and the American people”.

Although the Republicans agreed to raise the debt ceiling, Senate Republican Leader Mitch McConnell noted: “In the coming months, Senate Republicans will continue working to provide for the common defense and control Washington Democrats’ reckless spending”.

As the US avoided a potential default, markets reacted positively with the S&P 500 gaining 1% on Thursday, and closing at 4,221 levels. A rally in the tech stocks pushed the Nasdaq 100 even higher.

Similarly, Bitcoin and the broader cryptocurrency market have also followed the queue by gaining over 1%. With today’s price surge, Bitcoin (BTC) has regained the $27,000 level and Ethereum (ETH) reaches close to $1,900.

Other altcoins have also gained by 2% in the last 24 hours with Litecoin (LTC) outperforming the broader market by jumping over 4.5% amid strong on-chain volumes and Litecoin halving approaching very soon.

What’s Ahead Ater US Debt Ceiling Raise?

Market analysts are not quite bullish even as the US avoids a potential default. Many believe that this raising of the debt ceiling will give the Fed further room to increase interest rates in the upcoming FOMC meeting thereby leading to further quantitative tightening. This won’t be a good sign for risk-ON assets such as crypto and equities.

Popular crypto journalist Colin Wu explains: “The U.S. Senate on Thursday passed bipartisan legislation backed by President Joe Biden that lifts the government’s $31.4 trillion debt ceiling. Liquidity reserved for additional issuance of new U.S. debt may lead to tightening of liquidity in the U.S. stock market and cryptocurrencies”.