The "One Big Beautiful Bill Act" has just been narrowly passed by the U.S. Senate, thanks to the deciding vote from Vice President JD Vance. This bill will now return to the House for a final vote. The President has set a deadline of July 4 for Congress to send the final version for his signature.
Why is this bill important to the Crypto market?
Fiscal policies, particularly regarding spending and taxes, can have far-reaching effects on the macroeconomy and thus impact risk assets like cryptocurrencies in various ways:
Market sentiment: The passage of a large bill, especially with presidential support, can create stability or change in investor sentiment. If the bill is believed to promote economic growth, it may encourage capital flow into riskier assets like crypto. Conversely, if the bill raises concerns about inflation or budget deficits, it could put downward pressure on prices.
Monetary policy: Government spending and tax decisions can affect the policy of the Federal Reserve (Fed). For example, if government spending increases significantly without corresponding revenue, inflationary pressure may rise, forcing the Fed to reconsider interest rate policy. As previously analyzed, U.S. interest rate policy has a significant impact on the crypto market.
Cash flow and liquidity: Tax cuts or spending incentives can increase the amount of money in circulation, creating liquidity for financial markets, including crypto. Conversely, tax increases or tightened spending can reduce liquidity.
The bill's narrow passage in the Senate indicates a divide in Congress. However, if it is signed into law, the financial and macroeconomic impacts it brings will certainly be closely monitored by the crypto market, as they could shape price trends and capital flows in the near future.