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The United States Goes Bankrupt on June 1. Here’s What’s Next for Crypto

2 mins
By Laure Elizabeth IACOUCCI
Translated Harsh Notariya
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In Brief

  • The U.S. Treasury Secretary has warned the United States about an event that could plunge the country into bankruptcy by June.
  • The country could default on its public debt if Congress doesn't raise the debt limit.
  • If that were to happen, crypto would take a piece of the pie, but might not be the big winner.
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Bad news for the U.S. – the country could soon go bankrupt. Bankruptcy could impact crypto, but maybe not as anticipated.

Panic in the U.S. – Will the Coffers Soon Be Empty?

As the U.S. continues to deal with the collapse of its banks, especially with the recent bankruptcy of First Republic Bank, the disaster might have only just begun.

According to a report published by The Wall Street Journal, the financial situation of the U.S. could deteriorate at high speed during the month of May. 

The Secretary of the Treasury, Janet Yellen, has announced that the country could default on the payment of its public debt by June 1 if Congress doesn’t raise the debt limit.

Without Congress raising the debt limit, the U.S. will default on its payments for the first time. President Joe Biden will meet some Congress members to discuss the matter.

A default would put the coffers of the country definitively in the red. Consequently, the situation could only be resolved by taking out new loans.

This is a situation to which contemporary countries are accustomed but which could turn out deadly. Especially at a time when the dollar is more threatened than ever. 

Indeed, the list is gradually expanding concerning foreign countries that are turning to other alternatives for trade settlement.

For now, the U.S. government has not yet offered a solution to the problem, which will be debated next week. However, according to the WSJ, no agreement will be found at any point soon.

US bankruptcy. The U.S. no longer has money to burn.
The U.S. no longer has money to burn.

How Would Crypto React in the Event of U.S. Bankruptcy?

If the U.S. does go bankrupt, crypto would be rubbing its hands. Indeed, as Bitcoin (BTC) has become a safe haven, consolidated by its correlation with gold, many Americans could invest in crypto in order to protect their savings.

Thus, cryptocurrencies could become an alternative choice. This is at a time when El Salvador or Bulgaria can become the richest of the countries due to their Bitcoin holdings. However, commodities such as gold still remain a serious competition.

For now, the Federal Reserve’s (Fed) will share its outlook imminently. The outcome could have an impact on the Bitcoin price. Industry experts expect a 25 bps interest rate hike.

The moral of the story: the economy is collapsing, but Bitcoin is still going strong!

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For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

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Harsh Notariya
Harsh Notariya is a journalist at BeInCrypto, who writes about various topics, including decentralized physical infrastructure networks (DePIN), tokenization, crypto airdrops, decentralized finance (DeFi), meme coins, and altcoins. Before joining BeInCrypto, he was a community consultant at Totality Corp, specializing in the metaverse and non-fungible tokens (NFTs). Additionally, Harsh was a blockchain content writer and researcher at Financial Funda, where he created educational reports on...