Outside Source
The near two-month debt issuance suspension period could signal lower global liquidity, which may affect Bitcoin’s price leading into March.
News
The United States debt ceiling is flashing a critical warning sign for Bitcoin, which may experience a temporary correction to $70,000 before the next leg up in the market cycle.
The US Treasury is set to hit its $36 trillion debt ceiling a day after President-elect Donald Trump’s inauguration on Jan. 20.
Treasury Secretary Janet Yellen announced a “debt issuance suspension period” beginning Jan. 21, which is set to last until March 14, according to a letter published on Jan. 17.
Treasury Secretary Janet Yellen, letter on the debt ceiling. Source: US Department of The Treasury
The near two-month debt issuance suspension period could signal lower global liquidity, which is a red flag for Bitcoin (BTC) price action, despite setting a new all-time high above $109,000 on Jan. 20.
Bitcoin is set for a “local top” above $110,000 in January, before an “interim peak in liquidity” may lead to a deeper correction, according to Raoul Pal, founder and CEO of Global Macro Investor. Pal shared his analysis in a Nov. 29 X post.
GMI Total Liquidity Index, Bitcoin (RHS). Source: Raoul Pal
Based on its correlation with the global liquidity index, Bitcoin’s right-hand side (RHS), which marks the lowest bid price someone is willing to sell the currency for, will peak near $110,000 in January before falling below $70,000 by February.
Related: Trump ushering in new ‘era of memecoins,’ analysts call for altseason
Bitcoin correction depends on institutional reaction
Not all analysts are concerned about the debt ceiling’s impact on Bitcoin.
While traditional markets are set for tightened liquidity, the debt ceiling may have a mixed impact on Bitcoin price, according to Marcin Kazmierczak, co-founder and chief operating officer of Redstone.
Investors may even start seeing BTC as a hedge against monetary instability, he siad.
“During previous debt ceiling standoffs, Bitcoin has shown mixed correlations with traditional market liquidity metrics. The key factors to watch will be institutional behavior and whether this situation triggers broader market uncertainty,” Kazmierczak told Cointelegraph.
Related: Solana users hit by delays after Trump memecoins debut
Alvin Kan, chief operating officer of Bitget Wallet, added that volatility in traditional markets may spill over into the crypto market:
“It could lead to a broader market risk-off environment, potentially impacting Bitcoin negatively. The outcome would largely depend on investor behavior, economic policy responses, and global financial sentiment.”
However, global liquidity is expected to rise after March 14, signaling a promising sign for Bitcoin’s price trajectory for the rest of 2025.
The global M2 money supply — an estimate of all cash and short-term bank deposits — is projected to peak on Jan. 26, 2026, according to estimates from Jamie Coutts, chief crypto analyst at Real Vision.
BTC projection to $132,000 on M2 money supply growth. Source: Jammie Coutts
The growing money supply could push Bitcoin price to above $132,000 before the end of 2025, added Coutts.
Others are eying less conservative Bitcoin price estimates for the rest of the 2025 market cycle. Asset management giant VanEck predicted that Bitcoin may reach $180,000, after a potential 30% retracement in the first quarter of 2025.
Magazine: Bitcoin vs. the quantum computer threat: Timeline and solutions (2025–2035)
This article first appeared at Cointelegraph.com News
