The US treasury is expected to surpass its $36 trillion debt ceiling, a problem that President Trump may have to face on his first day in office. As a result, Bitcoin may experience a temporary correction to $70,000 before its next surge in the market cycle.
The crypto market is experiencing a surge fueled by Trump’s inauguration. It was expected.
Biden’s administration has seen debt numbers rise from $28 trillion to more than $36 trillion, growing by over $8 trillion in just three years. Just this year, the debt has increased by over $2 billion.
In a letter published on January 17, Treasury Secretary Janet Yellen declared a “debt issuance suspension period” will commence on January 21 and continue until March 14.
US Secretary Of The Treasury Janet L. Yellen Sends Letter To Congressional Leadership On The Debt Limit https://t.co/1GPjn1PHBx
— Mondo Visione (@ExchangeNews) January 18, 2025
This nearly two-month suspension of debt issuance could indicate a decrease in global liquidity. It also means a warning sign for Bitcoin price action. Bitcoin reached a new all-time high above $109,000 on Jan. 20, but it seems like this excitement will not be outlived.
During previous debt ceiling negotiations, Bitcoin showed inconsistent connections with standard market liquidity measurements.
This time, Alvin Kan, chief operating officer of Bitget Wallet, said that volatility in traditional markets may spill over into the crypto market. He stated, “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.”
While traditional markets are expected to limit liquidity, Marcin Kazmierczak, co-founder and chief operating officer of Redstone, believes the debt ceiling will have a mixed influence on Bitcoin prices. In fact, he suggested that investors may begin to perceive BTC as a protective measure against monetary instability.
Global liquidity is anticipated to increase following March 14. This will be a positive indicator of Bitcoin’s price trend throughout the remainder of 2025.
Things will be different tomorrow. pic.twitter.com/8Rmn1Jjgdr
— Michael Saylor⚡️ (@saylor) January 19, 2025
Meanwhile, the Bitcoin whale MicroStrategy is exploring another share expansion model to generate additional capital for further Bitcoin purchases. In fact, The company’s Bitcoin position has increased by a remarkable $19.055 billion as a result of the $28.179 billion spent and the methodical dollar-cost averaging into BTC. MicroStrategy’s BTC holdings are valued at $47.234 billion as of today.
According to the most recent reserve reports, Tether and Circle’s dollar-backed stablecoins contain over $95 billion in treasury notes.
Tether’s report indicates that the stablecoin issuer maintains $84.548 billion in government debt. Treasury bill holdings amount to $11.127 billion, according to Circle’s November 12 report, which was obtained from BlackRock.
The consistent demand for treasury bills could absorb American debt as stablecoins continue to develop. This could provide a fiat on-ramp to traders and encourage crypto adoption.
The rise of stablecoin issuers as buyers of treasury bills lessens the reliance on traditional buyers and eases worries that their holdings will drop due to global uncertainty. Stablecoins may serve as an alternative to stabilize the situation. This could hold until additional measures are implemented to alleviate the crisis.
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