Yellen Warns US Could Hit Debt Ceiling By June 1, Investors Worry About Crypto Meltdown

The U.S. treasury secretary, Janet Yellen, has warned the Congress the country might default on its debt as soon as June, which has triggered the fear of a potential cryptocurrency meltdown.

The U.S. currently faces a banking crisis after four major lenders crashed over the past few months, threatening the country's financial stability.

Amid this financial crisis, Secretary Yellen flagged the risk the U.S. could face if lawmakers failed to raise or suspend the borrowing authority of the country and prevent what could potentially become a global financial crisis.

The treasury secretary, in a letter sent to Congress on Monday, urged the leaders of the House "to protect the full faith and credit of the United States by acting as soon as possible" and address the $31.4 trillion ceiling on its legal borrowing authority.

Yellen underlined, "It is impossible to predict with certainty the exact date when the Treasury will be unable to pay the government's bills, and I will continue to update Congress in the coming weeks as more information becomes available."

Following the evaluation of federal tax receipts, the Treasury Secretary suggested that authorities might no longer be able to continue the government's obligations as early as June 1.

Since the broader cryptocurrency market is now considered a part of the global financial market, investors are spooked by Yellen's letter, anticipating a significant impact and meltdown of the crypto market.

Crypto investors' uncertainty could be credited to the increased selling pressure in the market, which caused the global digital asset industry to register a plummet for three consecutive days.

The ongoing crackdown by the U.S. regulators on crypto businesses and its lack of regulations do not ease investors' mood toward the highly volatile market.

On Tuesday, the crypto market saw a 1.9% loss with its total capitalization plummeting to $1.23 trillion over the past 24 hours.

The plunge could also be attributed to the upcoming Federal Open Market Committee meeting, which based on the general expectation, will show the Federal Reserve announcing its 10th rate hike.

Bitcoin, the world's first-ever digital asset that seemingly benefited from recent crashes by major U.S. banks, saw a 2.09% loss over the past 24 hours and was trading down $27,993.19 with a 24-hour volume of $15,779,132,079, as of 6:19 a.m. ET on Tuesday based on the latest data from CoinMarketCap.