Bitcoin Lingers Below $26.5 Amid Debt Ceiling Worries

Unemployment and productivity data arrived stronger than expected but investors seemed focused narrowly on the ongoing negotiations that will determine if the U.S. government has to default on its debts.

AccessTimeIconMay 25, 2023 at 8:56 p.m. UTC

The U.S. announced unexpectedly strong unemployment and GDP data, but crypto investors had debt ceiling negotiations on their minds, Thursday.

They recently kept bitcoin lingering under $26,500, up about 0.3% but below its most recent nearly two-week-long range between this threshold and $27,500. The largest cryptocurrency by market capitalization has lost some of its 2023 gains in recent weeks as investors wrestle with a mix of macroeconomic uncertainties, most prominently of late the U.S.’s ongoing debt limit stalemate that will determine whether the U.S. government can pay its bills. On Thursday, Republican House lawmakers reported progress in discussions with the White house, but whether the sides can reach agreement in time to avert a government default remains uncertain.

"Debt ceiling concerns are definitely weighing on BTC and crypto generally,” Riyad Carey, research analyst at digital assets data provider Kaiko, wrote via Twitter to CoinDesk. “We've been fairly range-bound in the past few weeks as there have not been many crypto-specific catalysts.

Carey does not expect any dramatic price shift in bitcoin’s price in the near future, if not beyond with the next major catalyst, the BTC halving, almost a year away. “Of course, regulatory developments could shake this up,” he wrote.

Ether was recently changing hands at just over $1,812 up roughly 0.3% from Wednesday, same time. Most other major cryptos assumed faint shades of green with MATIC, the token of layer 2 platform Polygon, recently rising 2%. The CoinDesk Market Index, a measure of crypto markets performance, was up 0.46%.

Tech stocks seemed to levitate after chipmaker Nvidia said sales would rise because of the growth of artificial intelligence protocols. The tech-heavy Nasdaq Composite and S&P 500, which has a hefty technology component climbed 1.7% and 0.9%, respectively. Safe haven asset gold continued itsrecent decline less than a month after reaching a near record high, falling more than a percentage point to trade at $1,959.

But assets of all stripes seemed largely unmoved by Thursday’s jobs data, which showed 229,000 Americans filing unemployment benefits last week, well below the anticipated 245,000, and the U.S. economy expanding 1.3%, the third consecutive quarter of growth. Earlier this year and throughout 2022, such news might have sent digital assets cascading, but CoinDesk analyst on Thursday highlighted a shift in the good-economic-news-leads-to-lower-crypto- prices narrative.

Still, the debt limit negotiations remained at the center of many market observers’ radars. “Everything hinges on the debt ceiling right now, and until a resolution of some sort is found, I don’t expect to see Bitcoin outperform as it has since the start of the year,” Brent Xu, CEO and co-founder of Umee, a Web3 bond-market platform, wrote to CoinDesk. “If the crisis gets prolonged, it seems like BTC and other digital assets might linger or even push downward for a good while.”

Xu wrote that bitcoin and other digital assets remain  in a  “crypto Spring phase, so the current sideways volatility, punctuated by pullbacks after short runs, is to be expected,  that this trend will continue until next year when the halving kicks in. When that happens, we’re likely off to the races.

He added: “For now, with so much macro and political uncertainty, I think investors and traders are being cautious with their capital.”

Edited by James Rubin.


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James Rubin

James Rubin was CoinDesk's U.S. news editor based on the West Coast.