As investors closely monitor debt ceiling negotiations, Bitcoin experiences a decline, falling below the $27,000 mark

As investors remained vigilant about the ongoing debt ceiling negotiations in Washington, Treasury Secretary Janet Yellen issued a warning that the U.S. might surpass its debt limit by June 1, which could potentially lead to a recession if a default occurs. Bitcoin (BTC) witnessed a slight downward consolidation on Tuesday, dipping slightly below the $27,000 threshold.

According to CoinDesk data, the leading cryptocurrency by market capitalization was recently traded at $26,950, representing a decline of approximately 1.3% for the day. In the past 24 hours, the price of BTC has remained within a range of $26,800 to $27,400.

While Treasury Secretary Janet Yellen warned that the U.S. is projected to breach the debt limit as early as June 1 and said a default “could lead to a recession,” several analysts believe a resolution to the debt ceiling issue could potentially buoy Bitcoin.

“The current macroeconomic situation is, in our view, conducive for increased crypto adoption,” Joe DiPasquale, CEO of crypto fund manager BitBull Capital, told CoinDesk in an email. “The debt ceiling getting raised also bodes well for risk assets as market participants seek to secure wealth,” he added.

Lucas Outumuro, head of research at blockchain analytics firm IntoTheBlock, told CoinDesk that there “could certainly be a bid for BTC” whether or not there’s a deal on the debt ceiling.

Outumuro sees the impact of these negotiations and the ongoing bank crisis as similar: “They both highlight the weaknesses of the system and create doubts about their long-term sustainability, thus creating demand for potential alternatives like crypto.”