On April 26, the United States House of Representatives passed a bill to increase the U.S. debt ceiling. This led analysts to weigh its potential impact on the price of Bitcoin (BTC<\/a>), ranging from highly bearish to overly bullish.<\/p>\n Ultimately,\u00a0U.S. dollar liquidity is the key<\/a> to both of these opposing viewpoints.<\/p>\n Some analysts, including Jesse Meyers, the chief operating officer of investment firm Onramp, believe<\/a> raising the debt ceiling would prompt the Federal Reserve to print more money<\/a>, thus boosting capital inflows into \u201crisky\u201d assets like Bitcoin.<\/p>\n The debt ceiling represents<\/a> the maximum amount of money the U.S. government can borrow to pay its bills. <\/p>\n Related:\u00a0Fed balance sheet adds $393B in two weeks \u2014 Will this send Bitcoin price to $40K?<\/a><\/em><\/strong><\/p>\n Raising it means it can issue more debt to generate more capital. But since the Fed is not buying bonds anymore thanks to its \u201cquantitative tightening<\/a>\u201d and the flow of available money\u00a0crashing<\/a>, U.S. government debt may find it hard to attract buyers.<\/p>\n In other words, a deflationary recession\u00a0is coming<\/a>, with Meyers believing it will force the Fed to return to a quantitive easing policy.<\/p>\n \u201cWhen the debt ceiling is lifted and credit-contraction leads to economic crisis… They will have to print money on a massive scale,\u201d he stated, adding:<\/p>\n \u201cBitcoin was the winner during the last round of stimulus.\u201c<\/p><\/blockquote>\n The government has\u00a0already hit its $31.4 trillion debt ceiling in January 2023 and theoretically cannot generate more capital until the U.S. Senate passes the bill to raise the ceiling. <\/p>\n However, it\u2019s unlikely to pass the Senate, with President Joe Biden also\u00a0vowing to veto<\/a> the bill.<\/p>\n The standoff could result in the U.S. government defaulting on its debt in June, which poses negative consequences for the U.S. dollar, according to\u00a0Jeff John Roberts, crypto editor at Fortune.<\/p>\n \u201cIf [Republicans] decide to go the kamikaze route during the current debt ceiling standoff, it will deliver another major hit to the dollar\u2019s credibility\u2014and a further boost to Bitcoin,\u201d he\u00a0stated<\/a>.\u00a0<\/p>\n Meanwhile, former U.S. Treasury Secretary Lawrence Summers\u00a0downplayed<\/a>\u00a0the fears associated with a potential debt default, saying the odds of it happening stand under 2%:<\/p>\n \u201cI think the odds that we will default in the sense of insolvency, and over some interval people who hold bonds will not be able to get paid, are – assuming the absence of a major war – certainly under 2% over the next decade.\u201c<\/p><\/blockquote>\n\u201cDeflationary recession\u201d to produce 2020-like BTC rally?<\/h2>\n
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<\/figure>\nDollar credibility blow would boost Bitcoin price<\/h2>\n
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Fed won\u2019t do quantitative easing, bears argue<\/h2>\n