TOP-3 Assets To Look out for in Case of US Default

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Bloomberg writes that the risk of default is higher than ever, adding that according to Janet Yellen, she has no plan for the fact that the national debt ceiling will not be raised. The Treasury secretary, who worked at the Fed in 2011 when the situation was similar, said she was focusing on working with Congress to raise the ceiling.

With the denouement looming, Bloomberg polled more than 600 finance professionals between May 8 and May 12 for the best safe haven asset in the event of a default.

→ Top 1. Gold. More than half of the respondents said they would buy gold if the US government failed to meet its obligations.

→ Top 2. US bonds. It's a little paradoxical to buy bonds of a defaulting government. The logic is that bond payments take precedence — bond holders are usually paid, albeit late.

In third place, one could expect the Japanese yen or the Swiss franc. However…

→ Top 3. Bitcoin. Its price has increased by about 65% since the beginning of the year.

The BTC/USD chart today shows that the price of the coin has been in a downtrend since mid-April (shown in red) within a larger uptrend (shown in blue).

Having rebounded (1) from the intersection of the psychological level of USD $26k and the lower line of the red channel (2), the price of bitcoin found resistance from the red median line (3). If the bears are able to keep the momentum of BTC/USD within the downward channel, the price may drop to USD $25k or even lower, which will presumably reduce the attractiveness of bitcoin as a defensive asset.

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*At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules respectively. They are not available for trading by Retail clients.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

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