Market Review and Outlook for this Week: Employment Market Fluctuates, Consensus on Interest Rate Cut in September
Two main events affected the market over the past week: the fight between Trump and Musk, and the US employment data. Tragically, these are all US issues. However, the US stock indices have been reaching new highs almost daily, while the cryptocurrency market has suffered, with Bitcoin repeatedly struggling to break its previous high, and a significant number of contract positions have been liquidated. It’s no wonder that investors in the crypto space prefer to trade US stocks recently.
The performance of the US stock market is due to market expectations that the Federal Reserve will restart the interest rate cut cycle in September. Fortunately, Bitcoin also managed to break through $110,000 after the small non-farm employment data was released, although it saw a pullback by the weekend, but overall it maintained the $108,000 level, temporarily preserving its upward momentum.
Currently, the largest resistance on the daily line is still $110,000. Since this price has been tested three times, if it cannot remain stable at $110,000 or reach a new high, the risk of a short-term pullback to $106,000 or even $103,000 will gradually increase. The trend this month will largely depend on news and events from the US market.
Tariff negotiation deadline has passed; beware of sudden changes.
This week, the economic data to be released in the US is fewer than last week. Attention should be paid to the release of the Federal Reserve meeting minutes and unemployment figures on Thursday. Since the July interest rate meeting is at the end of the month, the Thursday meeting will simply focus on the directors' views on the current economy, particularly their stance on interest rate cuts. The latest unemployment figures will be released later that evening, so there will be significant market volatility on that day.
Another key focus is the negotiation status between various countries and the US before the tariff deadline on July 9, especially Trump’s statements. If negotiations with other countries break down again, it may lead to turbulence in both the stock and cryptocurrency markets. It is anticipated that the US will gradually announce different trade agreements starting Monday. If everything goes smoothly, at least the performance of US stocks will be optimistic, as long as the trade agreements with countries like China, the EU, and Japan do not change.
The passage of the 'Big and Beautiful Bill' will ignite a bull market in the second half of the year, but the increasing deficit will trigger a bear market in 2026.
(One Big Beautiful Bill Act) was officially signed into US law by the US Congress and President Trump on July 4, 2025. It is a significant bill with profound economic impacts, especially on the stock and cryptocurrency markets in the coming months and 2026. How should investors allocate funds regarding this bill? This article will analyze recent data, expert opinions, and market trends to provide a comprehensive overview of its potential short-term and long-term impacts.
Key Points
Research shows that the "Big and Beautiful Bill" may boost the stock market in the short term due to tax cut policies, but in the long term, the increase in deficits and rising interest rates may bring negative impacts.
Cryptocurrencies may benefit indirectly from inflation, with Bitcoin possibly seen as a hedging tool, but the evidence is mixed.
The impact on stock and cryptocurrency markets is complex, with potential short-term gains, but long-term uncertainty due to changes in economic policies.
Short-term Outlook (Next Few Months)
The "Big and Beautiful Bill" was signed into law on July 4, 2025, including tax cuts and increased spending that may stimulate the economy. This could push stock prices up in the coming months, as the market has already shown an upward trend, with the S&P 500 index and Nasdaq index reaching historical highs on July 3, 2025. For cryptocurrencies, on July 4, 2025, the total market value increased by 0.37%, driving Bitcoin to break through $110,000 for the third time, showing an initial positive reaction possibly driven by economic stimulus measures.
Long-term Outlook (2026 and Beyond)
In the long term, the bill is expected to increase the deficit by $2.8 trillion by 2034, triggering inflation and possibly boosting interest rates, slowing economic growth, and having a negative impact on the stock market in 2026. For cryptocurrencies, rising inflation may make Bitcoin more attractive as a hedging tool. However, given the current high correlation between the cryptocurrency market and the US stock market, higher interest rates may pose challenges to risky assets, bringing uncertainty.
Background and Context of the "Big and Beautiful Bill"
The "Big and Beautiful Bill" was passed by the US Congress and signed into law by President Trump on July 4, 2025. The main content includes extending the 2017 (Tax Cuts and Jobs Act), increasing military and border security spending, and implementing several tax cuts, with the most controversial being raising the US debt ceiling to $5 trillion. Experts expect an increase in federal deficits of $3.4-$4.1 trillion over the next 10 years, significantly weakening the value of the dollar.
Short-term Impact on the Stock Market
After the bill was passed, the US stock market immediately showed optimistic sentiment. On July 3, the S&P 500 index closed at 6,279.35, up 0.83%, the Dow Jones Industrial Average closed at 44,828.53, up 0.77%, and the Nasdaq Composite index closed at 20,601.10, up 1.02%, with both the S&P 500 and Nasdaq reaching historical highs.
At the same time, driven by the strong employment report in June, it shows an initial positive reaction to the bill's tax cuts and economic stimulus measures. CNBC analysts point out that the bill extends the soon-to-expire tax terms, avoiding a sharp fiscal contraction in 2026, which may boost corporate profits and consumer spending, supporting stock prices in the coming months.
CNN reports emphasize specific industries, such as manufacturing and technology, that are expected to benefit from immediate tax deduction policies for new facilities and equipment. It also highlights that stocks like Lockheed Martin are seen as potential winners due to an increase in military spending of $150 billion.
Long-term Impact on the Stock Market
However, the long-term outlook of the bill is also concerning. According to the Congressional Budget Office, the bill is expected to increase the deficit by $2.8 trillion by 2034, which may trigger inflation and raise interest rates. Analysis from the Yale Budget Lab shows that in the long run, the burden of the deficit may slow real GDP growth, with GDP projected to be nearly 3% lower by 2054 compared to a scenario without the bill.
This could lead to a 1.2 percentage point increase in the yield on 10-year Treasuries, raising corporate borrowing costs and lowering stock valuations, particularly affecting growth stocks that are sensitive to interest rates. The increase in deficits may also lead to a "crowding out effect," where government borrowing reduces private investment, further suppressing economic growth in 2026 and beyond, which aligns with (The Economist) criticisms that the bill poses risks to long-term economic stability.
Short-term Impact on the Cryptocurrency Market
For cryptocurrencies, the direct impact of the bill is limited because its provisions lack specific clauses targeting cryptocurrencies. However, on July 4, 2025, the global cryptocurrency market value increased by 0.37%, reaching $3.37 trillion, and Bitcoin’s price broke through $110,000, while Ethereum also briefly surpassed $2,600, indicating that the bill's impact on the US stock market simultaneously affected the cryptocurrency market.
This indicates an initial positive market reaction, possibly driven by overall economic stimulus and increased investor confidence. At the same time, the passage of the (GENIUS Act) regulating stablecoins may further enhance the legitimacy of cryptocurrencies and promote adoption in the short term.
Long-term Impact on the Cryptocurrency Market
In the long term, the effects are more speculative. Cointelegraph analysts believe that the fiscal policy of the bill may exacerbate inflation, benefiting Bitcoin as a hedging tool, especially if the Federal Reserve adopts a loose monetary policy; this effect is particularly evident.
However, higher interest rates and slowing economic growth may pose challenges to risky assets such as cryptocurrencies, while also potentially slowing the pace of interest rate cuts by the Federal Reserve and even leading to a possible increase in rates, causing investors to turn to safer bonds, which would dampen investment appetite for stocks and cryptocurrencies.
At the same time, although the bill includes many tax cuts, it does not include tax relief for cryptocurrencies, meaning the cryptocurrency industry does not directly benefit, which may dampen retail investors' enthusiasm, contrasting with the cautious attitude of institutional investors, increasing market uncertainty.
Conclusion: 2026 May Cause a Bear Market
The "Big and Beautiful Bill" may provide a boost to the stock and cryptocurrency markets in the short term due to economic stimulus. Recent data also supports this claim, and with expectations of a restart in the interest rate cut cycle, an optimistic market trend in the second half of 2025 is anticipated, with a significant chance of the US stock indices and Bitcoin reaching new highs. However, by 2026, the stock market may face negative impacts due to deficits and rising interest rates, and cryptocurrencies, which are highly correlated with the stock market, may face challenges due to economic slowdown and high interest rates, potentially entering a bear market.
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"【MICA RESEARCH】The 'Big and Beautiful Bill' Will Ignite a Bull Market in the Second Half of the Year, but May Trigger a Bear Market in 2026" was first published on (Blockcast).
