Bitcoin is still in a bearish trend even after US inflation data came out as expected. The uncertainty that looms over the market this time around is tied to the US debt ceiling which is reportedly reaching its limit. As it draws near, it is increasingly negative for risk assets, which might see BTC drop back to $25,000.

US Debt Ceiling Looms Over Bitcoin

The effect of the climbing US debt ceiling is showing prominently in not only the crypto market but in the stock market as well. In fact, it is Bitcoin’s high correlation with the stock market that has seen it go down as well in such market conditions.

According to Treasury Secretary Janet Yellen, the US will hit its debt ceiling as early as June 1. This only leaves around two weeks before then, and investors are understandably wary at this time as hitting this debt ceiling could be catastrophic for the economy.

A likely outcome is that the US will increase its debt ceiling once more, as it has been doing since 1960. However, it still leaves a lot of questions to be answered regarding the economy. Thus, investors are more likely to play it safe during this time.

Risk assets such as stocks and Bitcoin are expected to continue to decline until June 1. A decision regarding the debt ceiling would then determine how investors approach the market from there. But there is no telling if it will be a positive or negative outcome.

$25,000 Remains Likely For BTC

If the price of Bitcoin continues to decline into the next month, then the possibility of hitting $25,000 remains high. The bulls are currently holding support at $26,000 but this hold is shaky at best. If bears were to increase their selling pressure at this point, even by a small margin, BTC would easily break this support and head back down to $25,000.

Bitcoin trading under its 50-day moving average also supports this bearish trend. But this is only valid for the short term. For the long-term basis, the digital asset is still very much bullish, ranging above its 200-day moving average.

If bulls are able to hold $26,000 into the new month, then the short-term outlook for BTC turns bullish. This would likely lead to a recovery and another rally in price. If this happens, then the cryptocurrency will easily retake the $30,000 level again.

At the time of writing, BTC is trading at $26,191, down 2.03% in the last 24 hours and seeing 4.30% losses on the weekly chart.