Bitcoin Touches $28,000 as U.S. Debt Ceiling Deal Heads to Congress

Bitcoin and Ethereum continued to climb along with stocks as U.S. lawmakers ended their stalemate over the federal government's debt ceiling, boosting risk-on sentiments in the market.

Bitcoin touched $28,000 Monday morning, with Ethereum breaking above $1,900. At time of publication, Bitcoin stands at just under $28,000, up 2.9% on the day, with Ethereum holding above $1,900, up 3.2% in the last 24 hours, per CoinGecko.

A protracted stand-off between Democrats and Republicans over the federal government’s $31.4 trillion debt ceiling appeared to end this past weekend, as U.S. President Joe Biden and Republican House speaker Kevin McCarthy reached a tentative deal on Saturday evening.

The deal will now move to Congress for a vote; if approved it will prevent the U.S. government from defaulting on its debt.

In exchange for implementing spending caps and making cuts to government programs, the agreement would extend the suspension of the debt ceiling until January 2025.

The stock markets held on to last week’s impressive gains at the prospect of a formal deal, with the S&P 500 futures reaching a nine-month high above the 4,220 level and the tech-heavy Nasdaq-100 index futures opening with a positive gap above 14,400 points—a 14-month high—on Monday.

On the other hand, gold’s price has dropped since last week as the lawmakers worked toward averting a default on the American economy, strengthening the dollar’s value. Gold was last trading at $1,941 per ounce, down 2.45% from the monthly opening value.

The next major market moving event from the U.S. economy will arrive two weeks from now at the Federal Reserve policy rate meeting on June 14-15.

Currently, CME traders are placing a 65% chance, per the CME FedWatch tool, that the central bank will increase the benchmark rate yet again, dashing hopes that May’s 25-basis point rate hike was the last one for this year.

Previously, rate hikes have put selling pressure on Bitcoin as higher dollar yields make risk-on assets like Bitcoin and stocks unattractive.