The upcoming end of the US debt suspension period this Friday could serve as a significant driver for Bitcoin’s price, potentially bringing new liquidity into the markets and fueling a price recovery.
The US Treasury reached its $36 trillion debt ceiling just one day after President Trump’s inauguration on January 20. A “debt issuance suspension period” commenced at that time and was anticipated to continue until March 14, as detailed in a letter released on January 17.
During these two months of debt suspension, Bitcoin (BTC) saw a decline of 22%, dropping from over $106,000 on January 21 to $82,535 as of March 12, according to data from TradingView.
BTC/USD, 1-day chart tracking the debt suspension period. Source: TradingView
As government spending resumes, it may provide a liquidity boost that catalyzes Bitcoin’s next upward movement, according to Ryan Lee, chief analyst at Bitget Research.
“With cash readily available, there could be an uptick in the demand for financial assets such as stocks and cryptocurrencies, potentially alleviating ongoing volatility,” Lee expressed. “During such phases, an overall increase in momentum can be expected, although it’s important to consider other influencing factors.”
In addition to uncertainties regarding global tariffs, Lee emphasized that issues like inflation, interest rates, and geopolitical tensions remain unresolved.
Notably, the conclusion of the debt suspension period comes just two weeks after the White House Crypto Summit, which may allow some of the new liquidity to flow into cryptocurrencies, suggested Aleksei Ponomarev, co-founder and CEO of a crypto index investment firm.
“Historical trends show that liquidity increases have generally benefitted Bitcoin and other high-risk assets, and the conclusion of the US debt suspension should follow suit,” he mentioned, adding:
“While the influx of liquidity is likely to influence market prices, its effects will be short-lived. The long-term trajectory of Bitcoin will continue to be linked to institutional investments, the growth of ETFs, and regulatory clarity and enforcement.”
GMI Total Liquidity Index, Bitcoin (RHS). Source: Raoul Pal
Bitcoin’s right-side indications, which reflect the lowest selling bid price, may still face potential corrections toward $70,000 leading up to the end of the debt suspension on Friday, based on correlations with the global liquidity index.
Nevertheless, an increase in the money supply could push Bitcoin’s price past $132,000 before the conclusion of 2025, according to estimates from a chief crypto analyst.
BTC projection to $132,000 based on M2 money supply growth. Source: Jamie Coutts
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Bitcoin price still constrained by global trade war concerns
While increased global liquidity bodes well for Bitcoin, factors such as global trade tariff issues pose ongoing limitations, according to James Wo, the founder and CEO of a venture capital firm.
“Some may argue that the retaliatory actions from countries subject to tariffs were already anticipated in prices, yet tariffs typically have a delayed economic effect beyond their initial announcement,” he noted.
“The rise in import costs combined with shrinking corporate margins is likely to elevate inflation, compelling central banks to maintain higher interest rates under restrictive monetary policies,” he continued.
This situation may further tighten liquidity conditions, making high-risk assets like Bitcoin “less appealing in the short to medium term,” Wo suggested.
Related: Backlash on Bitcoin reserves signals unrealistic expectations in the industry
The European Union’s implementation of retaliatory tariffs on March 12 could lead to a short-term Bitcoin correction below $75,000, as Europe represents a significant portion of over $1.5 trillion in annual US exports.
Despite concerns regarding short-term corrections, most analysts remain optimistic about Bitcoin’s price trajectory for late 2025, with predictions ranging from $160,000 to over $180,000.
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