Bitcoin price briefly fell below the $26k level on May 25 as investors panic due to political partisanship in debt ceiling talks. Fitch Rating placed the United States “AAA” credit rating on negative watch as US President Joe Biden and Republicans debt ceiling talks failing to reach bipartisanship.
The crypto market cap slides 2% more on Thursday to extend its fall this week. The global crypto market cap now reaches below $1.10 trillion, with top altcoins such as Ethereum, XRP, Cardano, Polygon, and Solana near to breaking key support levels.
Fitch May Downgrade US Rating To Negative Amid Debt Ceiling Impasse
Rating agency Fitch placed United States’ “AAA” Long-Term Foreign-Currency Issuer Default Rating (IDR) on Rating Watch Negative. Fitch said it will downgrade the rating if President Joe Biden’s administration and congressional Republicans do not raise or spend the debt limit by June 1.
Treasury Secretary Janet Yellen warned that the US Treasury will run out of funds by June 1. The Treasury General Account fell to $57 billion from $316 billion earlier in May, with the opening balance of $636 billion this fiscal year.
Fitch’s downgrade will affect debt securities, treasury bills, and the country’s post-default ratings. An S&P downgrade of the US rating in 2011 caused other downgrades and massive sell-off in stock markets.
“However, we believe risks have risen that the debt limit will not be raised or suspended before the X-date and consequently that the government could begin to miss payments on some of its obligations.”
Asian stock market opened lower amid rising US debt default risk and the Treasury running out of funds this week. While House Speaker Kevin McCarthy is confident about a deal before the June 1 deadline, but selloff has already started due to debt ceiling brinkmanship.
Meanwhile, the US dollar rises over a 2-month high with the US Dollar Index (DXY) advancing above 104. The probability of a rate hike pause by the US Fed in June continues to decline, according to CME FedWatch Tool.
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Bitcoin Price To Break Below 200-WMA
BTC price is expected to end the week below the key 200-WMA. A massive selloff will follow if the price fails to rebound before the week’s close. BTC price currently trades near the $26,000 level and ETH price broke below $1800.
Veteran trader Peter Brandt warned crypto investors of BTC price probably breaking below $25k to the next support at $24.8k
Also Read: Stocks And Crypto May Crash Within Weeks Of Debt-Ceiling Deal; Here’s Why