This week welcomes the new year 2025, as Bitcoin clears the haze of late 2024, starting to rebound on January 1, 2025, rising to around $96,000 before the weekend. U.S. Treasury Secretary Janet Yellen warned of a potential debt 'black swan' event in January, and China's foreign exchange authority tightened Bitcoin policies. However, the 'Trump Trade' is back in focus, as a U.S. state is set to begin purchasing Bitcoin within four months, and Switzerland has approved a Bitcoin reserve proposal.
Yellen warned 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. may reach a new debt ceiling at some point 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. debt default.
She emphasized, 'I respectfully urge Congress to take action to protect the full faith and credit of the United States.'
It is worth noting that Trump's inauguration on January 20 coincides with the period when the Treasury Department estimates may reach the debt ceiling, and both the debt ceiling and Trump's inauguration increase geopolitical and economic uncertainty. Moreover, raising the U.S. debt ceiling has always been a negative signal for Bitcoin, as evidenced by declines or poor performance in the days following the last five debt ceiling increases.
CoinDesk points out that since the cyclical low during the FTX collapse in November 2022, Bitcoin has been following the trend of the previous two cycles. Currently, the return on Bitcoin from the cyclical low is close to 500%, similar to the performance at the same time during the previous two cycles when the debt ceiling was raised, which is not a good sign for bulls.
Because both the cycles from 2018-2022 and 2015-2018 experienced significant declines at the time of raising the debt ceiling, as shown in the red box in the chart below, this implies that Bitcoin may experience a bottoming event on Trump's inauguration day, January 20.
However, what is more alarming for the global market is the potential black swan event of a U.S. debt default in January. If both parties cannot reach an agreement 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 and recession and undermine the dollar's status as the world's reserve currency.
The State Administration of Foreign Exchange of China tightens policies.
According to a report by the South China Morning Post (SCMP), the State Administration of Foreign Exchange of China announced that banks will strengthen monitoring and reporting of 'high-risk foreign exchange trading behaviors', including underground money houses, cross-border gambling, and illegal cross-border financial activities involving cryptocurrencies.
The regulation applies to banks across mainland China and also requires them to track such activities based on factors such as the identity of the involved institutions and individuals, sources of funds, and transaction frequency. Furthermore, regulators stated that banks must also establish risk control measures covering these entities and limit certain services to them.
This means that the new regulations require banks to track the identities, sources of funds, and transaction patterns of the individuals and entities involved. The latest regulations reflect that China continues to impose strict regulatory measures to eradicate commercial cryptocurrency activities such as Bitcoin trading and mining, as digital assets are seen as a threat to national financial stability.
'Trump Trade' good news: A U.S. state will begin purchasing Bitcoin, and Switzerland has approved a Bitcoin reserve proposal.
Bitcoin rebounded in the latter part of the week, largely attributed to progress in global strategic reserves as the new year 2025 approaches. Dennis Porter, co-founder and CEO of the Satoshi Action Fund, stated in a Twitter post that a U.S. state is almost 100% certain to start purchasing Bitcoin in the next four months. He also mentioned that his team is actively pushing for the passage of related legislation, emphasizing that this is not just a prediction but a reality that is happening.
Porter responds to a series of questions regarding future state-level Bitcoin acquisitions. When asked about predictions for a certain state (particularly Texas) purchasing Bitcoin in 2025, Porter provided detailed insights. 'This is a great statement, and it's an accurate prediction, but I think it will be slightly off. You might want to adjust it to reflect that it will be one of the first states to include Bitcoin in its balance sheet. Because currently, Texas's bill actually does not allow the state to purchase; it only permits donations and tax payments,' Porter clarified.
Porter explained the mission of the Satoshi Action Fund, stating that it is a nonprofit organization dedicated to advocating for Bitcoin by educating lawmakers and regulators about its benefits. The organization not only promotes Bitcoin adoption but also develops model policies that can be enacted into law.
So far, the fund has assisted in proposing 30 bills in 20 states across the U.S., covering about 50% of the states. Porter emphasized that their efforts are not limited to legislation; the fund works closely with legislators to ensure these bills pass smoothly.
Additionally, CryptoSlate reported that the Swiss Federal Chancellery has approved the formal submission of the 'Bitcoin Initiative', which is a proposed constitutional amendment requiring the Swiss National Bank to allocate part of its reserves to hold Bitcoin. This measure is close to a national referendum, and interest in sovereign adoption of Bitcoin is growing.
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, authorizing the Swiss central bank to allocate part of its reserves to Bitcoin and gold. Supporters argue that Bitcoin's decentralized and deflationary characteristics could enhance Switzerland's financial resilience and sovereignty. The Swiss Federal Chancellery confirmed that the initiative meets all legal requirements, including collecting valid signatures and adhering to procedural formalities. Federal Chancellor Viktor Rossi stated, 'The initiative has been confirmed to comply with the constitutional and legal framework for federal popular initiatives.'
Bitcoin technical analysis.
Economies.com states that Bitcoin prices closed above $95,195, confirming that it is trending toward a bullish wave both intraday and short-term, with a target price of $99,000, followed by the $102,000 level.
Breaking through the expected bullish wave of EMA 50 support, while breaking above $95,195 represents a key return to correcting 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.'
