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Analysts Warn a US Debt Deal Could Bring Pain to Crypto Market

Some analysts are warning that a potential deal to raise the US government's $31.4 trillion debt limit may bring pain to the crypto market, which has benefited from fears of government default and the Federal Reserve's continued rate hikes.

A debt deal would likely lead the Treasury to issue government bonds to build back its cash balance, which could suck out liquidity from the system and put upward pressure on bond yields. As bitcoin is known to move in the opposite direction of bond yields, it could suffer.

However, market consensus is that a default would lead to panic selling and a global dash for cash, similar to the one seen during the coronavirus-induced crash of March 2020 when bitcoin tanked by over 50%.

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