US Debt Crisis: What’s the Impact on Crypto & Market?
• The US has hit its $31.4 trillion debt ceiling and is running out of money.
• Bipartisan negotiations are underway to lift the debt ceiling, but no agreements are in sight.
• Most experts agree that a U.S. government default would be catastrophic for the U.S. economy and the global financial system.
US Debt Ceiling Crisis
The United States has recently reached its $31.4 trillion debt ceiling and is rapidly running out of money as Treasury Secretary Janet Yellen pointed out that the debt ceiling needs to be lifted before June 1 or else risk missing its debt obligations due to Treasury bondholders, thereby defaulting on its sovereign debt.
Bipartisan negotiations are underway to lift the debt ceiling, however, no agreements have been made yet between Democrats who want the ceiling to be raised without any preconditions and Republicans who are demanding several cuts in government spending as contingencies for lifting the ceiling.
Consequences of Default
Most experts agree that a U.S. government default would have catastrophic impacts on both the U.S economy and global financial system such as stock markets crashing, millions of jobs being lost, and an economic recession occurring in response to this crisis situation.
Impact on Crypto & Broad Market
In light of these events, Cointelegraph reported an assessment of risk regarding a possible default in the US and what impact this could have on crypto markets and broader market performance should it occurr..
Risk of Default
What are then chances for a US government default? Expert opinions differ — however it is clear that if it does happen then investors should brace themselves for severe losses across all asset classes including crypto assets which could drop substantially if panic selling ensues following news reports about a potential US government default..