The U.S. is likely to hit its debt limit between January 14 and January 23, according to Treasury Secretary Janet Yellen. Following this, the Treasury might implement "extraordinary measures" to prevent exceeding this borrowing ceiling. In a letter sent to the House Speaker, Mike Johnson, Yellen emphasized the need for Congress to ensure the nation's financial integrity.

Yellen remarked, "I respectfully urge Congress to act to protect the full faith and credit of the United States." The debt limit was previously suspended until January 1, 2025.

Recent market behaviors indicate turbulence, with U.S. equities and Bitcoin facing downturns following Yellen's letters. Historically, raising the debt ceiling has been perceived negatively by Bitcoin, potentially predicting a similar trend this time around. It has previously performed poorly around the debt ceiling adjustments.

Moreover, alongside these developments, the inauguration of Donald Trump as President on January 20 brings additional unpredictability to the market.

As the national debt exceeds $36.2 trillion, the relationship between financial legislation and Bitcoin's performance remains an area of focus.

U.S. national debt is likely to reach its statutory limit in mid-January (Shutterstock)

The market will keenly observe these changes as investors watch for potential sharp movements in Bitcoin's cycle, particularly leading into the inauguration.