Bitcoin and other cryptocurrencies were falling early Wednesday, as markets soured on risk assets ahead of the House vote on the U.S. debt-ceiling.
Bitcoin
was down 2.9% over the previous 24 hours to $27,136. The largest cryptocurrency briefly rose above $28,000 on Tuesday before sharply falling back.
The bill to raise the U.S. debt ceiling faces a House vote on Wednesday. While the legislation now doesn’t include a proposed tax on cryptocurrency miners, its passage and the associated issuance of government debt could still be bad news for the crypto sector.
“In the mid-term, money is removed from more risky assets, to buy government bonds. The consequence could be an additional slowdown in volumes and liquidity for the stock and digital asset markets, with a potential negative impact on prices,” wrote Matteo Greco, research analyst at Fineqia International, in a research note.
Bitcoin has recovered from the lows reached in the wake of the collapse of crypto exchange FTX but has failed to build on breaks past the level of $30,000.
A slowing adoption curve after the “crypto winter” that set in with the collapse of FTX in November last year has left Bitcoin’s price “well ahead of itself,” according to Jurrien Timmer, director of global macro at Fidelity Investments.
“Bitcoin still has potential as digital gold, but that potential is a lot more modest than it appeared a few years ago,” Timmer tweeted on Wednesday.
Beyond Bitcoin,
Ether
—the second-largest crypto—dropped 2.1% to $1,874. Smaller cryptos, or altcoins, were also dropping, with
Cardano
falling 1.5% and
Polygon
down 2.7%, as were memecoins, with
Dogecoin
down 2.2%.
Write to Adam Clark at [email protected]
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