• The number of Bitcoin holders has increased by more than 68 percent, surpassing 40 million.

• The U.S. debt crisis amid high inflation is a clear testament to the Fed’s struggle with de-dollarization.

The Bitcoin (BTC) market rebounded nearly 2 percent above the 200 weekly moving average on Tuesday after posting bearish sentiments in the past four weeks. In the latest crypto market data, Bitcoin is trading at around $27.33K at the time of press. 

The spike comes at a time the crypto market is grappling with low liquidity and total traded volumes. A report by on-chain analytics platform Santiment has shown that the combined trading volume of Bitcoin and Ethereum has dropped to the 2nd lowest threshold since September 2019.

Analyst Bearish on Equities

The rising tension in global geopolitical has fueled significant shifts in the economic outlook especially with the rise of de-dollarization. In the latest updates, the Federal Reserve Bank of Minneapolis President Neel Kashkari and Federal Reserve Bank of St. Louis President James Bullard joined Fed officials to consider more rate hikes amid the debt crisis. Notably, President Joe Biden assured the electorates that his government will have a solution to the debt ceiling in due time before the deadline.

In order to prevent high inflation, Kashkari believes a rate hike above 6 percent is imminent. As a result, Kashkari cautioned investors that even if the Fed skips the rate hike in June, economists should not consider it a pause or a pivot.

I think right now it’s a close call, either way, versus raising another time in June or skipping. What’s important to me is not signaling that we’re done,

Notably, the $31.4 trillion debt ceiling is approaching the deadline and President Joe Biden and House Speaker Kevin McCarthy ended discussions late Monday with no agreement on how to raise the government’s debt ceiling. As a result, JPMorgan CEO Jamie Dimon has issued a stern warning to investors on the risks associated with market equities amid the debt crisis. 

In a note to investors, a JPMorgan analyst noted that the risks of the United States government defaulting on its loans will increase the overall market turbulence. Similar warnings have been issued by other banks including Bank of America and Goldman Sachs. 

According to Goldman analysts, the U.S. Treasury’s cash balance can fall below $30 billion by June 8-9, a threshold historically used to project the debt’s deadline.

We also expect a few more twists along the way, and suspect that markets are likely to price in additional risk before the debt limit is finally raised,

Bitcoin Shines

Despite the risk with market equities, the Bitcoin market has attracted significant attention from institutional and retail investors. A year into the Bitcoin halving, which typically triggers the crypto market, both short and long-term crypto holders have been observed stashing more coins.

The rise of Bitcoin holders also coincides with a decline in exchange balances, which is considered a bullish outlook.

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