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Here’s why Bitcoin price could correct after the US government resolves the debt limit impasse

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For much of 2022, the crypto market focused on the U.S. Federal Reserve’s actions. The central bank created a bearish environment for risk-on assets like stocks and cryptocurrencies by increasing the interest rates on borrowing.

Toward the end of 2022, positive economic data, healthy employment numbers and a decreasing inflation rate provided hope that a much-awaited slowdown in the rate of interest rate hikes would occur. Currently, the market expects the rate hikes to reduce from 50 basis points (bps) to 25 bps before the complete end of the hike regime by mid-2023.

U.S. Fed Balance sheet. Source: U.S. Federal ReserveU.S. Treasury General Account Balance. Source: MacroMicroBTC/USD price chart with Bitcoin-Nasdaq correlation coefficient. Source: TradingView

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