US Congress Raises Debt Limit By $2.5 Trillion, What Does This Mean For Bitcoin?

Congress has approved a $2.5 trillion increase in the government debt limit, experts explain how this could affect Bitcoin.

Debt ceiling raised again

The U.S. House of Representatives approved the previous debt ceiling hike in October 2021. It then involved an increase of $480 billion, bringing the borrowing limit to $28.9 trillion.

Republicans initially tried to oppose the bill. This was due to Democrats’ plans to increase social and climate spending. Still, the legislation was quickly signed by President Joe Biden and went into effect.

At the time, it was known that this limit increase would not do the country any good in the long run. However, the next hearing was already held in December. The scenario then largely repeated itself; the Republicans resisted, but the Democrats eventually got the upper hand.

The bill passed Congress by a vote of 221 to 209. It is now in the hands of President Biden, who is expected to sign it soon.

If he does, it will raise the federal government’s debt limit by 2.5 trillion to $31.4 trillion. This will delay the threat of federal bankruptcy until at least early 2023.

Speaker Nancy Pelosi praised the bill’s adoption, saying:

“The full confidence and creditworthiness of the United States should never be questioned. The health of our economy must never be endangered.”

By contrast, Republican Representative Jodey Arrington was unhappy with the vote. He noted that the country’s debt burden will be at its highest level since World War II.

The effect on Bitcoin

For the past two years, the US has printed excessive amounts of money and regularly raised debt limits. This of course has major consequences.

US inflation rates have historically risen by 3.24%, but have risen much more in the past six months. It led to a 6.8% increase in November, the highest increase in about 40 years.

On the other hand, Bitcoin has pre-programmed inflation rates that fall every four years. It cannot be reprinted and has a limited stock.

This attracted prominent investors from outside the cryptocurrency industry. Paul Tudor Jones III, Stan Druckenmiller, Thoma Bravo, Anthony Scaramucci and others started investing in BTC. They also praised it as an investment tool against rising inflation.

‘$2.5 Trillion Bitcoin Ad’

Max Keizer, host of the Keizer report and a well-known BTC supporter, said this bill has created the “perfect conditions for Bitcoin”. He added the following:

“I hate to see America collapse, but I don’t own more than a few dollars, so I don’t care.”

Scott Melker, known as the Wolf of All Streets, indicated that Bitcoin is an uncorrelated asset that presents a “unique opportunity for a savvy investor with a long-term view.” He said the following:

“Short-term news, such as the inevitable debt ceiling hike, is a small dot on the radar for Bitcoin. Everyone knows that the government will continue to print money and raise the debt ceiling where necessary. This is largely priced in to Bitcoin’s importance and use case – as a hedge against this nonsense.”

Tyler Winklevoss is the co-founder of Gemini and early adopter of BTC. He believes the Senate approval will actually work like a “$2.5 trillion advertisement for Bitcoin”. Michael Saylor shared a similar view, saying the following:

“It looks like Bitcoin has government backing.”

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