Bitcoin, the largest digital token, rose to the highest level in over two weeks on Monday, driven by investor sentiment boost from a deal on raising the US debt limit. The currency rallied by as much as 3.2%, but then steadied at $28,006 as of 8 a.m. in London. Other cryptocurrencies like Ethereum, Binance Coin, among others, posted gains and then dipped from their intraday highs.
The deal between President Joe Biden and House Speaker Kevin McCarthy, to raise the debt ceiling, has created an improved outlook for markets around the world. However, Congress still needs to clear the deal quickly to avoid a US default. A rise in Treasury yields and bets that the US will tighten monetary policy further are only a couple of potentially adverse factors.
“This morning’s positive risk sentiment directly relates to the resolution of the debt-ceiling impasse,” said John Toro, head of trading at Independent Reserve. “Front-end funding costs remain highly elevated relative to crypto returns, resulting in negative carry for long holders. This will continue to prove a headwind for risk assets and the crypto complex.”
The Bitcoin digital token has recorded five consecutive days of gains, its best run since March, easing somewhat the difficulties encountered in the past quarter due to low liquidity and the US crackdown. Since the lows of November 2022, Bitcoin saw five-day winning streaks a dozen times and increased by nearly 19% in the next 20 days on average. Despite the partial rebound of crypto markets in 2023 from last year's downturn, record highs, including Bitcoin's 2021 all-time peak of almost $69,000, remain distant.
"Bitcoin for now remains in a familiar range between $25,000 and $30,000, and we don’t think a future rally can be extrapolated from this latest move," said Caroline Mauron, co-founder of digital-asset derivatives liquidity provider OrBit Markets.