"Trump launches nuclear bomb! The 'Big and Beautiful' bill bloodbathes the dollar, will Bitcoin break 100,000 dollars tonight? Foolish shorts kneel!
When the 'Big and Beautiful' printing press starts, the double whammy of tax cuts + money distribution loosens the tap on global capital again! Once Old Trump signs this, the champagne in Wall Street and the fuel depot in the crypto world are likely to be filled up simultaneously.
How does the crypto world see it? Short-term, this is definitely a positive! Why?
1. Money is getting fluffy: The government is spending a lot, and tax revenue is down, so where does the money come from? Either by borrowing or printing. Regardless of which, there will be more money flowing in the market. When there's more money, purchasing power gets diluted, traditionally known as 'inflation'; from the crypto perspective, it means fiat currency is devaluing. At this time, assets like Bitcoin, which have a fixed supply and are called 'digital gold', naturally become a safe haven for some funds. Think about Bitcoin's performance after the massive monetary easing in 2020 due to the pandemic?
2. Hot money finds an outlet: Tax cuts give companies and wealthy individuals more idle cash. This money needs a place to grow. When the stock market is high and bond yields are low, some 'hot money' seeking high risk and high return will inevitably flow into the crypto market. Liquidity in the crypto space will be more abundant, volatility may increase, and trading will be more active.
3. Risk appetite rises: Such large-scale fiscal stimulus usually sends a signal to the market of 'government backing' and 'the economy is about to take off'. This will enhance the overall market's risk appetite. Investors are more willing to invest their money in high-risk assets like stocks and cryptocurrencies, rather than holding cash or buying low-yield bonds.
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