You’ve no doubt noticed that the United States of America is currently rapidly emptying its coffers to pay its bills. Its debt ceiling reached $31.4 trillion in January, and since then it has been living off reserves, which are now starting to run out.

There are those who argue that the US will not be able to pay its bills on June 1 unless a debt ceiling deal is reached soon.

What does this mean for Bitcoin?

Negotiations between Republicans and Democrats in Congress are currently deadlocked. That is, Bitcoin often trades sideways in anticipation of an outcome.

Yesterday we received unexpectedly positive data on the US economy. The number of jobless claims last week was 229,000, while 245,000 were expected.

So unemployment is growing at a lower rate than first thought. The US economy also grew for the third consecutive quarter, this time at a rate of 1.3 percent.

Those figures did little for the market, except that Nvidia had another green day. The chipmaker naturally benefits disproportionately from the rise of artificial intelligence, which requires a lot of chips.

Mostly

The most likely outcome of the impasse in the debt ceiling negotiations is that Congress and President Joe Biden’s administration will reach an agreement.

This will end this period of uncertainty and sometimes instability. Perhaps Bitcoin will benefit from that, but that depends on the Federal Reserve’s next interest rate decision.

For now, they are expected to raise interest rates and again on June 14 by 0.25 percent to a range of 5.25 – 5.50 percent.

This may not be very positive for Bitcoin, and is an odd decision by the Federal Reserve considering the aggressive rate hikes over the past 14 months. Especially yesterday’s economic data would have contributed to this.