On Thursday (January 2), Bitcoin rebounded to the level of $95,300 as the Swiss Chancellor approved a proposal to include Bitcoin in the national strategic reserves, proposing to amend the Swiss Constitution 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 analysts noted that Bitcoin is likely to repeat historical cycles, hitting a bottom during the inauguration of President Trump on January 20.
Swiss Chancellor Approves Key Proposal for 'Bitcoin Initiative'
CryptoSlate reports that the Federal Chancellery of Switzerland has approved the formal submission of the 'Bitcoin Initiative', a proposed constitutional amendment that requires the Swiss National Bank to convert part of its reserves into Bitcoin. Currently, the measure is nearing a national referendum, and interest in sovereign adoption of Bitcoin is growing.
(Source: CryptoSlate)
(Source: Fedlex Admin)
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 to authorize the Swiss central bank to allocate a portion of its reserves to Bitcoin and gold. Proponents argue that Bitcoin's decentralized and deflationary nature can enhance Switzerland's financial resilience and sovereignty.
The Federal Chancellery of Switzerland 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.'
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 national referendum.
The initiative is led by ten individuals, including prominent Bitcoin entrepreneurs and legal experts such as 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 cryptocurrency into its monetary policy.
Although the timeline for the referendum has not yet been determined, the measure is expected to spark considerable debate in this country known for its direct democracy and financial leadership. If approved by voters, the amendment could mark a significant shift in how central banks globally 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 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.
(Source: CoinDesk)
She emphasized, 'I respectfully urge Congress to take action to protect the full faith and credit of the United States.'
Notably, Trump's inauguration on January 20 falls within the period when the Treasury estimates the debt ceiling could be reached. Both the debt ceiling and Trump's inauguration add to the geopolitical and economic uncertainty, and 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 increases.
(Source: CoinDesk)
CoinDesk notes that since the cycle low during the FTX collapse in November 2022, Bitcoin has been following the trend of the previous two cycles. Currently, Bitcoin's return rate is close to 500% from the cycle low, similar to the performance at the same point in time during the previous two cycles when the debt ceiling was raised, which is not a good sign for the bulls.
Because both the cycles from 2018-2022 and 2015-2018 saw significant declines at the points of increasing the debt ceiling, as shown in the red box in the figure below, this suggests that Bitcoin may experience a bottoming event on Trump's inauguration day, January 20.
(Source: Glassnode)
But what is more alarming for the global market is the potential black swan event of U.S. debt default in January. If both parties cannot reach a consensus to raise or suspend the debt ceiling again next year, a debt default may occur, which could trigger economic and financial collapse 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 head and shoulders pattern on Wednesday, completing a bullish setup. However, breakouts typically retest the neckline.
(Source: CoinTelegraph)
The Relative Strength Index (RSI) is forming a negative divergence, indicating that momentum is slowing. This suggests that Bitcoin may drop to the neckline.
If the price rebounds strongly from the neckline, it indicates that bulls have turned that level into support. This increases the likelihood of resuming an upward trend towards the pattern target of $128,500. If it breaks through this level, Bitcoin may rebound to $165,000.
The first sign of weakness will be a drop and close below the neckline, with Bitcoin potentially falling to the key level of $66,077 at the 50-week simple moving average (SMA), which the bulls must defend. If this support level is broken, bears will take control.
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 indicate that selling pressure is easing. Then, Bitcoin could rise to the resistance line of the channel, breaking through and closing above the channel could push Bitcoin up 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.
