Biden Signs Debt Ceiling Deal – What It Means for Crypto

After months of political impasse and weeks of nail-biting negotiations, the much-anticipated debt ceiling package has finally been given the green light by Congress. Its timely passing averted the potentially catastrophic scenario of the Treasury Department running out of funds to meet the country's financial obligations. However, the road to victory was bumpy as the bill's contents were a hotly debated topic, with both sides of the political divide holding contrasting views.

The bill's unveiling over the Memorial Day holiday weekend gave leaders of both parties enough time to shore up support for its approval. But what does all of this mean for crypto? Can you be certain that your investments in crypto will flourish thanks to the new deal? Read on!

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debt ceiling deal signing

Illustration: Lenka T

Biden signs Debt Ceiling Bill 

After weeks of back and forth, US President Biden signed into law a debt ceiling bill passed by Congress, thus averting a catastrophe in the world’s largest economy. The 2023 Fiscal Responsibility Act permits the government to increase the so-called debt ceiling, enabling continued borrowing and ensuring bills are paid. The Treasury cautioned that if the debt limit was not raised beyond Monday, the nation would fail to meet its $31 trillion debt obligations. Such a default could have potentially caused market turmoil, massive job losses, and an economic downturn, affecting the global economy. 

In a statement on Saturday, the White House expressed gratitude to both Republican and Democratic congressional leaders for their collaboration. During a rare live address from the Oval Office on Friday evening, President Biden asserted that the debt ceiling legislation prevented the nation from experiencing an “economic collapse.” 

As he spoke from behind the iconic Resolute Desk during primetime, Biden acknowledged that the agreement reached to end the impasse between Democrats and Republicans was a compromise in which “nobody got everything they desired.” Nonetheless, Biden emphasized that the resolution successfully “avoided an economic crisis.” 

What could have happened to crypto? 

The intertwined fate of crypto and stock prices endured for a whopping 18 months until the frosty grip of the crypto winter began to thaw in January. And yet, even as we march steadily into the first half of 2023, the bond between the two remains unbreakable. 

But what happens when the world economy falters and stocks tumble into a dark abyss? A catastrophic global financial crisis would surely spell doom for crypto prices, forcing them to plummet in tandem with their stocky counterparts. If the U.S. failed to extend the debt ceiling, the outlook for crypto prices would undoubtedly be bleak. 

However, amidst the chaos and confusion of a financial meltdown, Bitcoin (BTC) may emerge as a beacon of hope. Its decentralized nature and unparalleled security could prove to be a saving grace in a world gone mad. After all, the failure of central financial systems has long been the rallying cry of Bitcoin permabulls who tout its superiority over traditional methods. 

So even if crypto prices initially suffer as markets go into panic mode, BTC could soon find its footing and gallop towards a glorious bull run. Just like it did after the wave of bank failures in March. Who knows, maybe at such a time, it could be the catalyst for a global revolution in finance. Luckily, the guess work is now out of the questions, thanks to the Bill being signed.  

Crypto miners rejoice 

Representative Warren Davidson (R-Ohio) breathed a sigh of relief as he declared, “The digital asset mining energy tax has been left out of the current debt proposal. Our opposition to this tax has finally paid off in a significant victory.” 

Meanwhile, Riot Platforms enjoyed a surge in their stocks, leading the pack of major mining companies with a whopping 10% rise. Others, including Iris Energy, Hive Blockchain, Cleanspark, Hut 8 Mining, and Marathon Digital Holdings, followed closely with a 5.5% or more increase. 

The proposed Digital Assets Mining Energy excise act, also known as the DAME act, caused quite a stir after it was introduced by the White House in early May as part of President Biden’s proposed budget for the 2024 fiscal year. If passed, firms using computing resources to mine digital assets would be subject to an excise tax on electricity costs, starting at 10% in 2024 and increasing to 30% in future years. The tax was expected to generate $3.5 billion in revenue over a decade. 

Despite being stalled for now, it doesn’t mean the DAME act couldn’t make a comeback in the future.  

What about cryptocurrency holders? 

Just as the curtain begins to close on the long and tumultuous saga surrounding the US debt ceiling, holders of daring assets like cryptocurrencies find themselves grappling with a new obstacle. The Treasury, seeking to restore its drained coffers with a deluge of Treasury bills valued at a whopping $1 trillion, is poised to drain reserves. Citi Research analysts, including the astute Alex Saunders, warned that this impending depletion could prove to be a formidable challenge.  

Their research indicates that during times of drawdown, assets with higher risk profiles are more prone to volatility and weaker returns. In light of this, it appears that Bitcoin and Ether may face a less than favorable near-term outlook. As the Citi Research team concluded in their report on Thursday (May 30), both coins tend to yield negative returns during such scenarios, with BTC exhibiting particularly poor performance in the median case. 

Another possible interpretation is that the latest chapter of fiscal frivolity and reckless borrowing could be precisely why cryptocurrencies hold their value. Especially those like Bitcoin, which have a finite supply cap. Enthusiasts of Ether (ETH) may well trumpet its deflationary nature with fervor. 

What remains to be seen is how digital assets will be politicized in 2023 and beyond. Both sides of the aisle have their share of proponents and detractors. However, the past year has witnessed an unfortunate shift towards partisanship that could prove problematic. 

By sidestepping a crypto mining tax, the current administration can claim they have taken no negative action against Bitcoin, which remains a hotly contested issue. As time progresses, it will be crucial to monitor how political figures express their opinions on crypto assets. For now, the latest debt deal did not elicit much commentary. But who knows what the future holds? 


With the passage of the Debt Ceiling Bill by US President Biden, we can avoid the “what if” scenarios, for now. Yet, we have to think about what all of this means for crypto, and there are two ways it can play out. The reality of the liquidity squeeze that will take place in the markets, often spells more turbulence for volatile assets (stocks, crypto). On the other hand, people in general could finally see that crypto is the way to go, as our monetary systems are fickle and seemingly hold less value than they did in the past.  

However, the only conclusion we can come to at this moment is that predicting the future is almost an impossible task, so we urge caution and for investors to keep one eye on the markets.  

Dino Kurbegović is a project coordinator and an investor and technology enthusiast with years of experience in managing complex projects. His journey into content writing began in 2014, covering finance, investing, crypto, technology and complex technical topics.