Bitcoin and Ethereum surge as US lawmakers scramble to avoid historic default

Cryptocurrency prices saw some surge over the weekend as lawmakers on Capitol Hill looked less likely to trigger the first-ever default in US history.

Republican House Speaker Kevin McCarthy and President Joe Biden were closing in on a finalized deal on the US debt ceiling on Sunday and gauging the support they have for passing legislation this week, according to the Associated Press.

“Earlier tonight, President McCarthy and I reached tentative budget agreement,” Biden said on Twitter on Saturday. “Over the next day, our negotiating teams will finalize the legislative text.”

Meanwhile, Bitcoin had climbed 2.9% over the past day to around $27,500, according to CoinGecko. Ethereum also rose 1.4% to around $1,850, with both coins seeing gains of 2.5% over the past week.

Some altcoins, including Cardano and Solana, outpaced those gains, rising 3.4% and 5.2% respectively, according to CoinGecko. The only coin in the top 20 by market cap in the red was Tron’s TRX, down 0.4% to $0.076 over the past day. But Tron still had a good week overall.

On Twitter, cryptocurrency trader @Rager attributed Bitcoin’s price rise to clouds parting on Capitol Hill. “Thanks for the weekend pump, White House,” he wrote.

The stakes are high as America’s coffers begin to run dry, says Treasury Secretary Janet Yellen warned a few weeks ago, explaining that the United States would be rocked by an “economic catastrophe” if Washington failed to raise the debt ceiling in time.

The rift between Democrats and Republicans has dragged on for weeks as the country moves rapidly closer to what the White House has described as America’X-datethe point at which the government can no longer honor its debts. This day could arrive as early as June 1, according at Yelen.

On May 8, Yellen acknowledged there was a “big rift” between Republicans and the president on raising the debt ceiling. A glue pointaccording to Biden, were “wealthy tax evaders and crypto traders” who he said should not be protected by a deal.

Based on media reports, it was unclear whether Republicans had agreed to certain measures on the debt cap bill that would impact crypto investors. McCarthy told reporters on Sunday that the compromise “doesn’t get everything everyone wanted,” according to the Associated Press.

Analysts said Decrypt last week that a default was unlikely, citing previous debt ceiling debacles that resulted in last-minute deals like in 2011. But, against all odds, several experts said crypto prices could drop as investors flee to safe-haven assets like the dollar during times of market stress.

As June 1 approaches, it remains unclear whether Washington can muster it in time or what impact a last-minute deal might have on markets. But, for now, it looks like the crypto markets are pricing the bipartisan front with some faith.

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