This week marks the arrival of the New Year of 2025, with Bitcoin clearing the gloom of late 2024 at the beginning of January 1, 2025, rebounding to around $96,000 before the weekend. U.S. Treasury Secretary Yellen warned of a potential debt 'black swan' event in January, while China's foreign exchange regulator tightens Bitcoin policies. However, the 'Trump Trade' is back in focus, with a U.S. state set to begin purchasing Bitcoin within four months, and Switzerland approving the Bitcoin reserve proposal.

Yellen warns of a 'black swan' event in January.

According to CoinDesk, Yellen warned in a letter to Republican House Speaker Mike Johnson that the U.S. could reach a new debt ceiling sometime between January 14 and January 23, at which point the U.S. Treasury would need to take 'extraordinary measures' to cut borrowing to prevent U.S. debt default.

She emphasized, 'I respectfully urge Congress to take action to protect the full confidence and credit of the United States.'

It is noteworthy that Trump's inauguration on January 20 falls during the period when the Treasury estimates the debt ceiling may be reached, increasing geopolitical and economic uncertainty, coupled with the fact that raising the U.S. debt ceiling has historically been a negative signal for Bitcoin, which has seen declines or poor performance in the days following the last five debt ceiling increases.

CoinDesk notes that since the cyclical low during the FTX collapse in November 2022, Bitcoin has been aligning with the trends of the previous two cycles. Currently, the return of Bitcoin from the cyclical low is close to 500%, similar to the performance at the same point in time during the previous two cycles of increasing the debt ceiling, which is not a good sign for bulls.

Because in the two cycles from 2018-2022 and 2015-2018, significant declines occurred at the time of raising the debt ceiling, as shown in the red box in the figure below, this means that Bitcoin may hit a bottom on Trump's inauguration day, January 20.

But what’s more alarming for the global market is the potential black swan event of the U.S. debt default in January; if bipartisan consensus cannot be reached to raise or suspend the debt ceiling again next year, it could lead to a debt default, which, as Yellen has repeatedly warned, may trigger economic and financial collapse as well as a recession, undermining the dollar's status as the world's reserve currency.

China's foreign exchange regulator tightens policies.

Hong Kong (South China Morning Post) reports that according to an announcement from China's State Administration of Foreign Exchange, banks will strengthen monitoring and reporting of 'high-risk foreign exchange trading activities,' including underground banks, cross-border gambling, and illegal cross-border financial activities involving cryptocurrencies.

The regulation applies to banks across mainland China and requires them to track such activities based on factors such as the identity of the institutions and individuals involved, sources of funds, and transaction frequency. Additionally, regulators have stated that banks must also develop risk control measures covering these entities and limit certain services provided to them.

This means that the new regulations require banks to track the identity, source of funds, and transaction patterns of the involved individuals and entities. The latest regulations reflect China's continued strict regulatory measures to eradicate commercial cryptocurrency activities such as Bitcoin trading and mining, as digital assets are viewed as a threat to national financial stability.

'Trump Trade' positive: A U.S. state will begin purchasing Bitcoin; Switzerland approves Bitcoin reserve proposal.

Bitcoin rebounded sharply in the latter part of this week, largely attributed to progress in national strategic reserves as the New Year of 2025 approaches. Dennis Porter, co-founder and CEO of the Satoshi Action Fund, stated on Twitter that a U.S. state is almost 100% certain to begin purchasing Bitcoin within the next four months. He also mentioned that his team is actively pushing for the passage of related legislation, not just making predictions, but rather indicating real progress that is happening.

Porter responded to a series of questions regarding future state-level Bitcoin acquisitions. When asked about a certain state (specifically Texas) predicting it would purchase Bitcoin in 2025, Porter provided detailed insights. 'This is a great statement; it is an accurate prediction, but I think it will be slightly off. You might want to adjust it to make it one of the first states to include Bitcoin on its balance sheet. Because currently, Texas's bill actually does not allow the state to purchase; it only allows for donations and tax payments,' Porter clarified.

Porter explained the mission of the Satoshi Action Fund, stating that it is a non-profit organization dedicated to advocating for Bitcoin by educating lawmakers and regulators about its benefits. The organization not only promotes the adoption of Bitcoin but also develops model policies that can be enacted into law.

So far, the fund has assisted in proposing 30 bills across 20 states in the U.S., covering about 50% of the states. Porter emphasized that their efforts are not limited to legislation; the fund works closely with lawmakers to ensure these bills are passed smoothly.

Additionally, CryptoSlate reports that the Swiss Federal Chancellery has formally approved the submission of the 'Bitcoin Initiative,' a proposed constitutional amendment that requires the Swiss National Bank to convert a portion of its reserves into holding Bitcoin. Currently, this measure is nearing a national referendum, and there is growing public interest in sovereign adoption of Bitcoin.

The formal 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, authorizing the Swiss central bank to allocate a portion of its reserves to Bitcoin and gold. Supporters believe that the decentralized and deflationary nature 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 adherence to procedural formalities. Federal Chancellor Viktor Rossi stated, 'The initiative has been confirmed to comply with the constitutional and legal framework of the federal people's initiative.'

Bitcoin Technical Analysis

The Bitcoin price closed above $95,195, confirming a bullish wave in the intraday and short term, with target prices at $99,000, followed by the $102,000 level.

Breaking through the expected bullish wave at the EMA 50 support, while breaking through $95,195 represents a return to the critical correction of the bearish trend.

'The expected trading range on Friday is between the support level of $95,000 and the resistance level of $99,000.'

'Trend forecast is bullish.'