Welcome to Distributed Ledger. I am Frances Yue, a reporter at MarketWatch.
Market fears are heightening as U.S. lawmakers struggle to reach a deal to raise the country’s debt limit by the approaching X date- the date when the U.S. government becomes unable to fulfill its debt obligations.
Analysts at JPMorgan Chase & Co. on Wednesday said the odds of debt ceiling negotiators’ inability to reach an agreement by early June are around 25% and rising. This uncertainty around a technical default of U.S. government debt has caused market volatility, with Treasury bills maturing in the first eight days of June rising above 6%
During such periods of turmoil, investors turn to safe-haven assets such as gold and bitcoin. However, gold futures, which had reached their second-highest settlement on record on May 4, have been retreating. Similarly, bitcoin, which had rallied almost 60% in 2021, has shown lackluster performance over the past few weeks, declining by 5.8% over the past month.
Experts have mixed views on whether gold and bitcoin effectively safeguard against a technical default of U.S. government debt. I caught up with analysts to gather their opinions.