Bitcoin ( BTC ) dropped below $28,000 on Tuesday during U.S. business hours, but then stabilized as investors watched progress on the debt ceiling deal whose passage was likely but not guaranteed.

According to CoinDesk, the largest cryptocurrency in terms of market capitalization traded at $27,740. This was up by 0.1% from the previous day but down slightly from the higher price earlier that day.

Bitcoin’s price chart shows that it was trading below $28,000 as of Tuesday afternoon. (CoinDesk)

BTC reached $28,000 for the first time since almost three weeks on Sunday after U.S. president Joe Biden and House speaker Kevin McCarthy agreed to suspend the federal debt ceiling through Jan. 1, 2025. This will prevent the country from defaulting as early as in June.

Edward Moya is a senior market analyst for foreign exchange Oanda . He wrote on Tuesday that too many crypto firms might have to deal with challenging financing options in the coming year.

The traders also revised their expectations of a more dovish monetary policy by the U.S. Federal Reserve. The CME FedWatch tool shows that there is a 66% chance the Fed will increase interest rates by 25 basis points at its meeting in June. Just a week earlier, only 28% of people expected a rate increase.

Dessislava Ianeva is a research analyst with crypto data firm Kaiko. She told CoinDesk that bitcoin had moved in lockstep to liquidity. Ianeva said that the Treasury’s spending on the Fed and Bank Term Funding Program partially offset quantitative tightening, which is usually when the central banks looks to reduce their balance sheet. But that push has now been exhausted.

Ianeva stated that further rate hikes coupled with QT would “definitely dampen prospects for an important market-wide rally.” “That being said, this year, BTC markets have been driven by other narratives such as NFTs and store-of value, along with technical factors like supply/demand…(Tether has publicly stated they’ll purchase) and liquidity.”

She believes BTC will be resilient this year, unlike last.

The second largest cryptocurrency in terms of market capitalization (ETH) rose by roughly 0.6%, changing hands at about $1,905. The payments-focused cryptocurrency XRP rose more than 6% on the day, trading at 52 cents. Filecoin’s FIL token also grew by 4% and traded at $4.83.

The CoinDesk Market Index, which measures the overall crypto market performance for the day, was up by 0.6%.

Equities ended a three-day holiday weekend mixed. The S&P 500 ended Tuesday flat, while the Dow Jones Industrial Average (DJIA), fell 0.1%. The Nasdaq, which is dominated by tech stocks, was up 0.3%.

Bond yields on the 2-year and 10-year Treasury notes both dropped 11 basis points, to be around 4.44% apiece. Crypto prices are generally inversely related to yields.

House of Representatives is expected to vote Wednesday on the debt limit deal. Some conservatives have already indicated that they will not vote for this hard-fought package, while a few progressive Democrats are still undecided. According to the weekend reactions to the news about the debt ceiling, a deal following the vote is likely to have a positive impact on the market on the short-term, Vetle Lunde wrote in her weekly note on Tuesday.

James Rubin is the editor.