The U.S. debt ceiling may be reached during Trump's inauguration, potentially signaling a bottom for Bitcoin

U.S. Treasury Secretary Janet Yellen wrote to congressional leaders indicating that the Treasury expects the U.S. to reach the debt ceiling as early as January 14 to 23, 2025, and may need to take "extraordinary measures" to avoid a federal debt default. Just before the letter was released, risk assets weakened at the close. The U.S. stock market fell, with the S&P 500, Nasdaq 100, and Dow Jones Industrial Average each down about 1%. Bitcoin dropped 4% from intraday highs. Historically, raising the debt ceiling has been a negative signal for the largest cryptocurrency, with declines or poor performance occurring in the following days during the last five instances. Since the cycle low in November 2022, Bitcoin has mirrored the trends of the previous two cycles. Significant pullbacks were observed at this point in the cycles of 2018-2022 and 2015-2018. Trump's inauguration on January 20 may herald a bottom for Bitcoin.