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BlackRock CEO expresses concern over ‘debt ceiling drama’

The CEO of BlackRock sees this as a potential boon for Bitcoin.According to CoinTelegraph, the recent increase in the US debt ceiling by the House has raised concerns about the diminishing trust in the US dollar, as noted by Larry Fink.

Larry Fink, CEO of BlackRock, has expressed his belief that the recent turmoil surrounding the US debt ceiling has diminished global confidence in the US dollar. Some analysts view this as a positive factor for Bitcoin.

Fink’s comments follow the passage of a crucial bill by the US House of Representatives on May 31 to raise the debt ceiling, which is now awaiting deliberation in the Senate. The US Treasury has set a June 5 deadline for raising the debt ceiling to avoid a potential default on the country’s debts.

Read our recent article on the debt ceiling deal here.

In a Reuters report on May 31, Fink predicted at least two more interest rate hikes by the Federal Reserve in the coming months, citing a lack of evidence for a decrease in overall inflation.

“I believe we will find a resolution, but it is important to note that the United States is endangering its reserve currency status.”

Bitcoin supporters and cryptocurrency investors often see BTC as a hedge against inflation and concerns about debt caused by central banks increasing the overall money supply.

Josh Gilbert, a market analyst with eToro, explained to Cointelegraph that the debt ceiling drama once again brings attention to Bitcoin, as investors may seek refuge in assets with finite supply outside the limitations of the current financial system.

“The debt ceiling deal once again highlights Bitcoin’s usefulness because it fundamentally breaks away from the traditional financial system. Due to its limited supply, it is immune to the issues currently faced by the US government,” he said.

However, Gilbert advises caution to investors expecting a significant surge in Bitcoin’s value due to current events, emphasizing that prevailing uncertainty and liquidity problems generate more fear than optimism.

“When the banking crisis occurred, it reduced inflation and expectations of rate hikes, which led to a rally in Bitcoin.”

Matteo Greco, a research analyst at investment firm Fineqia International, shared with CNBC that the current downward pressure on Bitcoin’s price is primarily due to investor concerns about the US reaching the debt ceiling.

Typically, when central banks increase interest rates, investors tend to withdraw funds from risky assets like cryptocurrencies and growth stocks.

“Given that Bitcoin experienced a notable decline in 2022, investors seized the opportunity presented by the shift in expectations related to the high-interest rate environment. They acquired Bitcoin at considerable discounts. Rate hike expectations have seen substantial changes this year and in the recent weeks,” Gilbert explained.

Gilbert suggests that if Fink’s fears of further rate hikes materialize, the price of Bitcoin could decline further from its current level. Conversely, if the Federal Reserve pauses its rate-hiking cycle in June, investors can anticipate positive price movement for Bitcoin.

USD Market value chart

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