{"id":351261,"date":"2021-10-11T16:14:00","date_gmt":"2021-10-11T13:14:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/us-debt-ceiling-crisis-a-catalyst-for-cryptos-ultimate-decoupling\/"},"modified":"2021-10-11T16:14:00","modified_gmt":"2021-10-11T13:14:00","slug":"us-debt-ceiling-crisis-a-catalyst-for-cryptos-ultimate-decoupling","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/us-debt-ceiling-crisis-a-catalyst-for-cryptos-ultimate-decoupling\/","title":{"rendered":"# US debt ceiling crisis: A catalyst for crypto\u2019s ultimate decoupling?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2dfb52b47f4\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2dfb52b47f4\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/us-debt-ceiling-crisis-a-catalyst-for-cryptos-ultimate-decoupling\/#Increasing_own_credit_card_limit\" >Increasing own credit card limit<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/us-debt-ceiling-crisis-a-catalyst-for-cryptos-ultimate-decoupling\/#A_risky_haven\" >A risky haven<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/us-debt-ceiling-crisis-a-catalyst-for-cryptos-ultimate-decoupling\/#Longer-term_benefits\" >Longer-term benefits<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># US debt ceiling crisis: A catalyst for crypto\u2019s ultimate decoupling?  <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMTAvZDUxZjQ3NWUtYmJhZS00MTY0LTg1ZGEtYmE1YjY2NmM0NzhhLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-128018ef>The United States federal government\u2019s default on its debt has been averted \u2014 at least for now. On Oct. 7, the Senate voted to increase the debt limit by $480 billion, a sum needed for the world\u2019s biggest borrower to keep paying off its obligations until early December.<\/p>\n<p>The deal secured a temporary resolution for a weeks-long partisan standoff that had investors both within and far beyond the U.S. unsettled. The once unimaginable prospect of a U.S. default seemed more conceivable than ever before.<\/p>\n<p>As the system-wide uncertainty peaked ahead of the vote, the cryptocurrency market has been doing just fine, led by Bitcoin\u2019s (BTC) biggest bull run in months. This has spurred customary narratives of crypto\u2019s decoupling from more traditional asset classes and of Bitcoin as a safe haven in times of looming financial disasters. <\/p>\n<p>So, what are the possible effects of the debt limit crisis on the role of digital assets in the global financial system?<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Increasing_own_credit_card_limit\"><\/span>Increasing own credit card limit<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The U.S. government, thanks to controlling the printing press for the world\u2019s reserve currency, has a unique power to set its own debt limit. Congress had first<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/sgp.fas.org\/crs\/misc\/R43389.pdf\"> imposed<\/a> a cap on the aggregate national debt in 1939, increasing this limit on more than 100 occasions since then.<\/p>\n<p>While the debt ceiling increase is normally not a partisan issue, things were different this time around. Embittered by Democrats\u2019 ambitious <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">social<\/a> and climate spending agenda, Senate Republicans took a principled stand refusing to back their opponents\u2019 attempts to address the impending deadline for either raising the debt limit or defaulting on federal debt.<\/p>\n<p>The lack of Republican support for increasing the debt limit, which requires sixty votes to pass the Senate rather than the simple majority that Democrats already wield, could be considered a symbolic move. Raising the amount of money that the Treasury can borrow does not authorize new spending in itself, but rather is meant to allow it to cover existing obligations.<\/p>\n<p>Partisan politics aside, some critics believe that the federal debt policy that relies on constantly increasing the borrowing cap is not great for the wallets of regular Americans. Chris Kline, co-founder and chief operating officer of cryptocurrency retirement investment provider Bitcoin IRA, noted to Cointelegraph:<\/p>\n<blockquote><p>\u201cThe government has given itself the ability to increase its credit card limit every year for the last hundred years on average and that has ramifications for the middle class. Middle class Americans are feeling the biggest pinch in their wallets from inflation and rising costs, all spawned from a monetary policy that is expanding the USD balance sheet.\u201d<\/p><\/blockquote>\n<h2><span class=\"ez-toc-section\" id=\"A_risky_haven\"><\/span>A risky haven<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The temporary patch of a solution that the Senate has agreed on only staves off the debt ceiling issue until early December, effectively perpetuating the macroeconomic uncertainty. One prominent argument is that this uncertainty can play into Bitcoin\u2019s hands in the coming weeks.<\/p>\n<p>Arina Kulackovska, head of corporate payment solutions at cryptocurrency exchange CEX.IO, believes that \u201cThis uncertainty could potentially continue to be a driver of a BTC rally.\u201d<\/p>\n<p>At the same time, Kulackovska notes that cryptocurrencies are starting to \u201ctrade apart from the legacy markets,\u201d which could lead to them being less malleable to macroeconomic dynamics that considerably affect more traditional asset classes.<\/p>\n<p>Kay Khemani, managing director at online trading platform Spectre.ai, believes that the impact of the debt limit suspension on financial markets in <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>, including digital assets, is \u201clikely to be favorable as it would mean more liquidity in the system (read: more debt),\u201d which tends to flow to financial assets first.<\/p>\n<p>Khemani further remarked: \u201cHigher debt does erode the value of the dollar over time and this further strengthens the narrative \u2014 however misguided it may be \u2014 that crypto is a safe haven asset.\u201d<\/p>\n<p>Still, the degree to which cryptocurrencies have decoupled from other assets like stocks is still a matter of debate. Eric Bleeker, analyst at investment advice company The Motley Fool, commented to Cointelegraph:<\/p>\n<blockquote><p>&#8220;As the kind of currency that relies on predetermined math instead of political brinkmanship, you\u2019d figure Bitcoin would benefit from events like debt ceiling stand-offs. [\u2026] While most Bitcoin fans point to it being an asset with a limited supply that should gain in value while the U.S. prints more debt, the reality is that it\u2019s been most closely correlated to the value of other risky assets in short-term sell-offs.\u201d<\/p><\/blockquote>\n<p>One example that Bleeker invoked was Bitcoin briefly dropping more than 50% last March at the beginning of the pandemic. He also added that things may play out differently in the long run, as events like the debt ceiling crisis degrade trust in the dollar and make alternatives like Bitcoin more attractive.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Longer-term_benefits\"><\/span>Longer-term benefits<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>While industry participants and analysts differ on the short-term effects of the U.S. federal debt limit uncertainty on the cryptocurrency market, most of them sound remarkably consonant when discussing how it can influence the market in the long run. Two concurrent trends that are often mentioned are the erosion of trust in the dollar and institutions backing it, and rising demand for crypto.<\/p>\n<p><strong><em>Related:\u00a0Crypto and pension funds: Like oil and water, or maybe not?<\/em><\/strong><\/p>\n<p>Haohan Xu, CEO of digital asset trading platform Apifiny, expects that raising the debt ceiling \u201cwill steadily <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ly more buy pressure on BTC, causing prices to steadily rise over time.\u201d Marie Tatibouet, chief marketing officer at cryptocurrency exchange Gate.io, thinks that \u201ccrypto&#8217;s quality as a market hedge will shine through.\u201d Tatibouet added that the crypto market has already outgrown stocks and gold since the pandemic began, adding: \u201cIf there is indeed a financial crisis due to the government defaulting, then crypto will be a safe haven in the long term, as it has already proven to be.\u201d<\/p>\n<p>Daniel Gouldman, CEO and co-founder of financial services provider Unbanked, calls the entire dance around the debt limit increase \u201cabsolutely ridiculous,\u201d as it makes the United States\u2019 credit score hostage of partisan politics:<\/p>\n<blockquote><p>\u201cWe welcome more people into crypto as our elected officials continue to play chicken with the full faith and credit of the U.S. dollar and U.S. government&#8217;s commitment to its own prior spending decisions.\u201d<\/p><\/blockquote>\n<p>Ron Levy, CEO of blockchain education and training firm The Crypto Company, notes the contrast between the two financial systems that the debt ceiling crisis makes conspicuous. Levy commented to Cointelegraph, that this might be the time when the crypto industry may finally decouple from traditional finance:<\/p>\n<blockquote><p>\u201cOn the traditional side, we have inevitable continued money printing, growing inflation and economic uncertainty. On the crypto side, we have an industry that has grown and continues to grow exponentially.&#8221;<\/p><\/blockquote>\n<p>It is likely impossible to tell if the ultimate decoupling is attainable at all, let alone when it can be achieved. Yet, the debt ceiling crisis goes a long way toward highlighting the difference between how traditional and digital money is governed \u2014 and this comparison is not particularly favorable to fiat currencies.<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"law_decoded\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/us-debt-ceiling-crisis-a-catalyst-for-crypto-s-ultimate-decoupling\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# US debt ceiling crisis: A catalyst for crypto\u2019s ultimate decoupling? &#8221; The United States federal government\u2019s default on its debt has been averted \u2014 at least for now. On Oct. 7, the Senate voted to increase the debt limit by $480 billion, a sum needed for the world\u2019s biggest borrower to keep paying off&#8230;<\/p>\n","protected":false},"author":1,"featured_media":351262,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMTAvZDUxZjQ3NWUtYmJhZS00MTY0LTg1ZGEtYmE1YjY2NmM0NzhhLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74862,117358,70551,70934,67874],"class_list":["post-351261","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin","tag-national-debt","tag-inflation","tag-regulation","tag-united-states"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/351261","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=351261"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/351261\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/351262"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=351261"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=351261"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=351261"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}