Bitcoin falls below $28K as investors monitor US debt ceiling progress

Bitcoin (BTC) experienced a drop below $28,000 during trading hours in the U.S. on Tuesday but then stabilized as investors watched for progress on a debt ceiling deal, which is likely to pass but not guaranteed. The largest cryptocurrency by market capitalization was trading at around $27,740, up 0.1% over the previous 24 hours, but slightly down from its earlier high point of the day, according to CoinDesk data. BTC rose above $28,000 on Sunday, for the first time in almost three weeks, after U.S. President Joe Biden and House Speaker Kevin McCarthy agreed to suspend the debt ceiling until Jan. 1, 2025 and prevent the nation from defaulting on its obligations as soon as June. The agreement also means that the U.S. Treasury would likely issue around $1 trillion of debt to replenish its Treasury General Account. Edward Moya, senior market analyst at foreign exchange Oanda, wrote in a note on Tuesday, “Typically, when governments issue debt that takes their debt to GDP at uncomfortable levels, that should be good news for crypto, but too many crypto companies might deal with difficult financing options over the next year.” Meanwhile, traders have revised their expectations for a more dovish, monetary turn by the U.S. Federal Reserve. The CME FedWatch Tool now shows a 66% probability that the Fed will raise interest rates 25 basis points for a fourth consecutive time at its June meeting. Only 28% expected a rate hike just a week ago. Crypto prices generally operate inversely to yields.