As the date for the US government default draws closer, major selloffs in cryptocurrencies like Bitcoin and Ethereum might occur next week, according to the CEO of Blockchain.com. After a debt ceiling agreement, the price of stocks and cryptocurrencies will also drop since the US Treasury Department anticipates issuing $700 billion in Treasury bills to make up for lost funds this quarter.
US Debt Situation Will Cause A Correction In The Crypto Market
Blockchain.com CEO Peter Smith stated during the Bloomberg-organized Qatar Economic Forum that the initial effects of a US default or recession will also affect cryptocurrency. However, after a brief time, cryptocurrency prices will rise again.
“On a long horizon, these are probably good for crypto…If the U.S. government defaults, we’ll probably see a quick pull-back and then a very strong push upward in the crypto market.”
Smith concurred that 2024 will be a huge year for cryptocurrency and that this year's poor recovery of the cryptocurrency sector is due to the April halving of Bitcoin.
Additionally, Blockchain.com is thinking of growing its modest Middle Eastern headquarters in Dubai, United Arab Emirates. Regulators in Dubai are adopting virtual asset legislation in a progressive manner. In September, the Virtual Assets Regulatory Authority (VARA) granted Blockchain.com approval.
It would be "catastrophic" for the global economy if President Joe Biden and Republicans were unable to reach a debt ceiling agreement. If the agreement is struck, it will, nevertheless, drain liquidity from the financial markets.
The US Federal Reserve will also change course this year. Given that inflation is still high and the labor market is still tight, Fed officials are pushing for two additional increases.