Bitcoin briefly recovered the $28,000 level over the extended holiday weekend for the first time since the start of the month, after the Biden administration reached a tentative deal with Republican lawmakers to address the U.S. debt ceiling.
The crypto market leader was up 1% Tuesday at $27,911.99, according to Coin Metrics. Ether was a little more than 1% higher at $1,910.75.
On Monday, bitcoin rose as high as $28,461.45, while ether reached a high of $1,928.16.
The cryptocurrencies began climbing on Saturday evening after House Republicans reached a tentative deal with the White House to raise the nation’s debt ceiling and avoid a default. Congress is set to vote on the legislation as early as Wednesday.
“The past few days have shown strong volatility as BTC dropped to the lowest trading price of about $25,800 on Wednesday due to investors’ fear concerning U.S. reaching the debt ceiling,” said Matteo Greco, research analyst at investment firm Fineqia International.
Bitcoin and ether roared higher the following day.
“However … This means that, in the mid-term, money is removed from more risky assets to buy government bonds. The consequence could be an additional slowdown in volumes and liquidity for the stock and digital asset markets, with a potential negative impact on prices,” Greco added.
As the debt ceiling negotiations weighed on crypto investors last week, the minutes of the latest Federal Reserve meeting also showed central bank officials are divided on where to go with interest rate hikes. With both of those factors, bitcoin has started behaving like a risk asset again, just as it was starting to trade more in tandem with gold earlier this year.
Bitcoin is now testing its March resistance level of about $28,800, said Yuya Hasegawa, a crypto market analyst at Japanese bitcoin exchange Bitbank.
Bitcoin and ether are on pace for their worst month since November, down 5% and up less than 1%, respectively. Bitcoin is on pace for its first negative month in five.
For the quarter, bitcoin is down 2%, after finishing the first quarter up 71%. Ether is up 4.4%, after it posted a 52% gain in Q1.