The U.S. debt ceiling is signaling a critical warning for Bitcoin, which could face a temporary correction to $70,000 before continuing its upward trend in the market cycle.
The Treasury is set to reach its $36 trillion debt ceiling the day after Donald Trump’s Jan. 20 inauguration as president.
Treasury Secretary Janet Yellen has announced a “debt issuance suspension period” starting on Jan. 21 and lasting until March 14, according to a letter published on Jan. 17.
This suspension period could lead to reduced global liquidity, which poses a challenge for Bitcoin despite it reaching a new all-time high of $109,000 on Jan. 20.
Short-Term Correction Expected
Raoul Pal, founder and CEO of Global Macro Investor, predicts Bitcoin will hit a “local top” above $110,000 in January before experiencing a correction below $70,000 by February.
Pal’s analysis, shared in a November post on X, highlights Bitcoin’s correlation with global liquidity, suggesting an interim peak in liquidity could trigger this pullback.
Impact of Debt Ceiling on Bitcoin
While some analysts remain cautious, others believe the debt ceiling’s impact on Bitcoin could vary.
Marcin Kazmierczak, COO of Redstone, noted that Bitcoin’s behavior during previous debt ceiling disputes has shown mixed correlations with traditional markets.
“The key factors to watch will be institutional behavior and whether this situation triggers broader market uncertainty,” Kazmierczak told Cointelegraph.
Alvin Kan, COO of Bitget Wallet, added that traditional market volatility could spill into crypto, potentially impacting Bitcoin.
“It could lead to a broader market risk-off environment,” Kan said, emphasizing the importance of investor behavior and global financial sentiment.
Long-Term Outlook
Global liquidity is expected to improve after March 14, which could bolster Bitcoin’s price later in 2025.
Jamie Coutts, chief crypto analyst at Real Vision, forecasts a peak in the global M2 money supply by Jan. 26, 2026, signaling a more favorable outlook for Bitcoin.
