Bitcoin Faces 22% Drop as US Debt Ceiling Suspension Ends

Bitcoin is poised for a significant price movement as the United States debt suspension period concludes. The US Treasury reached its $36 trillion debt ceiling on January 21, prompting Treasury Secretary Janet Yellen to announce a debt issuance suspension period that lasted until March 14. This suspension has had a notable impact on Bitcoin's price, which has decreased by 22% since the suspension began, falling from over $106,000 to $82,535.

Analysts anticipate that the resumption of government spending will inject fresh liquidity into the markets, potentially driving a price rebound for Bitcoin. Ryan Lee, chief analyst at Bitget Research, suggests that the increased liquidity could boost demand for financial assets, including cryptocurrencies, and alleviate ongoing market volatility. However, he cautions that other factors such as inflation, interest rates, and geopolitical issues remain unresolved and could influence Bitcoin's trajectory.

The end of the debt suspension period coincides with the recent White House Crypto Summit, which could direct a portion of the new liquidity into cryptocurrencies. Aleksei Ponomarev, co-founder and CEO of a crypto index investing firm, notes that surges in liquidity typically benefit Bitcoin and other risk assets. While the liquidity surge may drive short-term price movements, the long-term trajectory of Bitcoin is tied to institutional investments, ETF growth, and regulatory clarity.

Despite the potential for a price rebound, Bitcoin's price may still face a correction to near $70,000 until the end of the debt suspension period. This is based on its correlation with the global liquidity index. However, the growing money supply could push Bitcoin's price above $132,000 before the end of 2025, according to estimates from a chief crypto analyst.

While increased global liquidity is a positive sign for Bitcoin, the cryptocurrency remains constrained by global trade tariff concerns. Higher import costs and reduced corporate margins could push inflation higher, forcing central banks to maintain elevated interest rates under a restrictive monetary policy. This could tighten liquidity conditions, making risk assets like Bitcoin less attractive in the short to medium term.

The introduction of retaliatory tariffs by the European Union on March 12 could temporarily push Bitcoin's price below $75,000 due to Europe's significant role in US exports. However, most analysts remain optimistic about Bitcoin's price trajectory for late 2025, with predictions ranging from $160,000 to above $180,000. Despite short-term correction concerns, the overall outlook for Bitcoin remains positive as the debt suspension period concludes and liquidity is expected to increase.