Bitcoin rose to the highest level in more than two weeks in the past few hours, after a deal to suspend the US debt ceiling was announced, which supported investors' appetite for riskier assets.
Meanwhile, the cryptocurrency market received more support after Hong Kong's decision to allow small investors to buy popular cryptocurrencies like bitcoin on government-regulated platforms, thanks to new rules aimed at cementing the city's position as a hub for digital assets.
The largest digital token added as much as 3.2% on Monday before trimming some of its gains, as prices are now hovering around the $28k level after breaching this important level for some time over the past hours. Other small tokens ranging from Ethereum to Binance Coin have posted notable gains in recent hours. Cryptocurrencies are showing up as a get-rich-quick opportunity with huge bursts of small coins entering the market daily.. but the majority end up falling behind in the massive upswing.
Debt ceiling agreement revives the market
The debt ceiling deal between President Joe Biden and House Speaker Kevin McCarthy has stimulated risk appetite in global markets. But the deal still needs to be approved quickly by Congress to avoid a US default.
However, the recent rise in Treasury yields and bets on further monetary tightening by the Federal Reserve are discouraging investors.
John Toro, head of trading at digital asset exchange The Independent Reserve, said: “The positive risk sentiment this morning relates directly to the resolution of the debt ceiling impasse, as initial funding costs remain too high relative to cryptocurrency returns, resulting in a return below the cost of investment for long holders.” This will continue to hamper risk appetite in the cryptocurrency community.
It is noteworthy that bitcoin’s gains today are the fifth in a row, and it is the best series of consecutive gains since March, which eases the difficulties during the current quarter due to weak liquidity and the US crackdown on the sector.
Cryptocurrency markets have partially rebounded in 2023 from last year's turmoil that led to crises like the FTX crash. However, cryptocurrencies are still far from record highs, including Bitcoin's peak of roughly $69,000 in 2021.