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BTC Pulse 2025-01-20 18:51:00

$36T US Debt Ceiling Signals Bitcoin Correction After Trump Inauguration

The U.S. is expected to reach its $36 trillion debt ceiling on January 20-the day Donald Trump takes the oath to office as President. In reaction, the Treasury Secretary has declared a debt issuance halt starting January 21 to March 14. The two-month halt may raise uncertainty in global liquidity and spill into financial markets-Bitcoin included. The bitcoin that briefly reached an all-time high of $109,000 on January 20 may see a short-term correction. Analysts, including Raoul Pal, are of the belief that while a correlation between Bitcoin and global liquidity might suggest a local peak at $110,000 in January, tighter liquidity conditions will likely push its price below $70,000 by February. Institutional Reaction Key While the potential liquidity crunch is a red flag, experts are divided over its overall implications for Bitcoin. Marcin Kazmierczak, COO of Redstone, points to Bitcoin’s growing reputation as a hedge against monetary instability. “During past debt ceiling standoffs, Bitcoin has shown mixed correlations with traditional market liquidity metrics. Institutional behavior and broader market sentiment will be key factors to watch,” Kazmierczak explained. Also, Alvin Kan, the Chief Operating Officer at Bitget Wallet, said there was a good chance of chaos from conventional markets shifting into the cryptocurrency world. He reiterated the situation depends on investors’ reactions and turnaround policies at different levels in various world economies. Long-term Bull Outlook Although there is some short-term uncertainty, global liquidity should recover after March 14. According to Jamie Coutts, chief crypto analyst at Real Vision, the global M2 money supply will peak in early 2026, which would be highly favorable for Bitcoin’s price. He thinks that Bitcoin could top $132,000 by the end of 2025. However, asset manager VanEck is even more bullish, suggesting Bitcoin could rise as high as $180,000 after a 30% retracement in early 2025. While the debt ceiling crisis and temporary effects on liquidity could be a catalyst to volatility, Bitcoin’s long-term trajectory firmly remains bullish, propped by increasing institutional adoption and expanding global money supply.

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