On Thursday (January 2), Bitcoin rebounded to the level of $95,300 as the Swiss Prime Minister approved the proposal to include Bitcoin in the national strategic reserves, suggesting a constitutional amendment to enhance financial independence with Bitcoin. U.S. Treasury Secretary Janet Yellen warned that the U.S. could reach its debt ceiling between January 14 and 23. Market analysis indicates that Bitcoin is likely to repeat historical cycles, potentially hitting a bottom during President Trump's inauguration on January 20.
The Swiss Prime Minister approves the 'Bitcoin Initiative' heavyweight proposal
CryptoSlate reports that the Swiss Federal Chancellery has approved the formal submission of the 'Bitcoin Initiative', a proposed constitutional amendment requiring the Swiss National Bank to convert part of its reserves into holding Bitcoin. The measure is now close to a nationwide referendum, and there is growing interest in sovereign adoption of Bitcoin.
(Source: CryptoSlate)
(Source: Fedlex Admin)
The official name of the initiative is 'For a Financially Strong, Sovereign, and Responsible Switzerland', proposed on December 5, 2024, and supported by prominent Bitcoin advocates and financial reformers.
The proposal aims to amend Article 99 of the Swiss Constitution to authorize the Swiss National Bank to allocate a portion of its reserves to Bitcoin and gold. Supporters believe that the decentralization and deflationary characteristics of Bitcoin can enhance Switzerland's financial resilience and sovereignty.
The Swiss Federal Chancellery confirms that the initiative meets all legal requirements, including the collection of valid signatures and compliance with procedural formalities.
Federal Chancellor Viktor Rossi stated, 'The initiative has been confirmed to comply with the constitutional and legal framework of federal popular initiatives.'
The approval from the Federal Chancellery does not guarantee the implementation of the initiative, which now requires review by the Federal Assembly to determine its validity and consistency with Swiss law. If the initiative is deemed valid and enough signatures are certified, Swiss citizens will vote on the measure in a nationwide referendum.
The initiative is led by 10 individuals, including prominent Bitcoin entrepreneurs and legal experts like Luzius Meisser and Giw Zanganeh. These supporters emphasize that the proposal has the potential to enhance financial independence by diversifying Switzerland's monetary reserves.
Supporters of the Bitcoin plan believe this is a forward-looking initiative in line with Switzerland's tradition of financial innovation. However, critics warn that Bitcoin's volatility poses risks. They argue that requiring the central bank to hold such assets could expose the Swiss financial system to unpredictable market fluctuations, potentially undermining its hallmark stability. The initiative, if enacted into law, would make Switzerland one of the first constitutional countries to incorporate cryptocurrencies into its monetary policy.
Although the timeline for the referendum has not yet been determined, the measure is expected to spark significant debate in this country known for direct democracy and financial leadership. If approved by voters, the amendment could mark a significant shift in how central banks around the world handle digital assets and modernize their reserve strategies.
Yellen warns of a potential 'black swan' event in January
According to CoinDesk, Yellen warned in a letter to Republican House Speaker Mike Johnson last week that the U.S. could reach a new debt ceiling sometime between January 14 and January 23, at which point the U.S. Treasury will need to take 'extraordinary measures' to cut borrowing to prevent a U.S. default.
(Source: CoinDesk)
She emphasized, 'I respectfully urge Congress to act to protect the full faith and credit of the United States.'
It's worth noting that Trump's inauguration on January 20 coincides with the period when the Treasury Department estimates the debt ceiling could be reached, increasing geopolitical and economic uncertainty. Additionally, raising the U.S. debt ceiling has historically been a negative signal for Bitcoin, with declines or poor performance following the last five increases in the days afterward.
(Source: CoinDesk)
CoinDesk notes that since the cyclical low during the FTX collapse in November 2022, Bitcoin has remained aligned with its trajectory during the previous two cycles. Currently, Bitcoin's return from the cyclical low is close to 500%, similar to the performance at the same time points when the debt ceiling was raised in the previous two cycles, which is not a good sign for bulls.
Because both the 2018-2022 and 2015-2018 cycles experienced significant declines at the time of raising the debt ceiling in this cycle, as shown in the red box in the diagram below, this suggests that Bitcoin may hit a bottom on Trump's inauguration day, January 20.
(Source: Glassnode)
But what is more concerning for the global market is the potential black swan event of a U.S. debt default in January. If the two parties cannot reach a consensus to raise or suspend the debt ceiling again next year, it could ultimately lead to a default, potentially triggering economic and financial collapse and a recession, as Yellen has repeatedly warned, undermining the dollar's status as the world's reserve currency.
Bitcoin Technical Analysis
CoinTelegraph notes that Bitcoin closed above the neckline of the inverted head and shoulders pattern on Wednesday, completing a bullish setup. However, after a breakout, it typically tests the neckline again.
(Source: CoinTelegraph)
The Relative Strength Index (RSI) is forming a negative divergence, indicating that momentum is slowing. This implies that Bitcoin may drop to the neckline.
If the price strongly rebounds from the neckline, it indicates that bulls have flipped this level into a support. This increases the likelihood of resuming the upward trend toward the pattern target of $128,500. If this level is broken, Bitcoin could bounce back to $165,000.
The first sign of weakness would be a drop and close below the neckline, where Bitcoin could fall to the key level of $66,077, the 50-week simple moving average (SMA), which bulls must defend. If this support level is broken, bears will take the advantage.
On December 20, Bitcoin rebounded from the 50-day moving average of $92,907, indicating strong demand at lower levels. Buyers must push the price and maintain it above the 20-day exponential moving average (EMA) of $98,786 to signal that selling pressure is easing. Then, Bitcoin could climb to the resistance line of the channel, breaking through and closing above the channel could propel Bitcoin to $113,331.
If bears pull Bitcoin below the 50-day moving average and the $85,000 support area, a deeper correction may begin. This could lead to a retest of the breakout level at $73,777.
