The looming U.S. debt ceiling deadline has analysts speculating on its potential impact on Bitcoin, as Treasury Secretary Janet Yellen warns Congress to act quickly. In a letter to House Speaker Mike Johnson, Yellen emphasized that the debt limit, temporarily suspended until January 2025, will likely be reached between January 14 and January 23. She urged lawmakers to “protect the full faith and credit of the United States,” citing risks to financial stability.
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Bitcoin Shows Weakness amid Market Uncertainty
The announcement spooked markets, with the S&P 500 (SPX), Nasdaq 100 (NDX), and Dow Jones (DJIA) each dropping roughly 1%, while Bitcoin fell as much as 4% from its intraday high. Historical trends don’t paint a rosy picture either—Bitcoin has underperformed after each of the past five debt ceiling raises. December has already been lackluster for Bitcoin, down 3% and on track for its first red month since August.
Bitcoin Mirrors Past Cycles
Bitcoin’s current trajectory mirrors previous cycles, particularly after the FTX collapse in late 2022. According to Zerohedge, the cryptocurrency has gained nearly 500% since its last low, a pattern that previously preceded significant corrections. With President-elect Donald Trump’s inauguration set for January 20, some believe this date could mark a new cycle low for Bitcoin.
At the time of writing, Bitcoin is sitting at $91,562.94.
