Trump’s “ Big Beautiful Bill is praising tax discipline, but the debt of 2.4 billions of dollars which will add to the already alarming deficit of the United States to Wall Street on alert. Meanwhile, bond yields continue to surrender and uncertainty about American treasury bills as a haven is looming.
Vincent Liu, director of investments at Kronos Research, told Beincrypto that these factors could further stimulate Bitcoin demand. Altcoins, on the other hand, may not get away with it as well.
Trump’s economic vision meets the first counterouss
The Trump administration welcomes the only major law on law as significant legislation which will considerably improve the fiscal trajectory of the United States.
The bill adopted the Chamber in May and awaits the approval of the Senate. It would release billions of dollars from tax reductions and health care reduction, food coupons and clean energy programs.
While the White House said that the bill will open the way to an “unprecedented era of economic growth”, others are less some.
In addition to Elon Musk’s references to legislation as a “disgusting abomination”, Wall Street has shown particular discomfort. Its apprehension has reverberated considerably, in particular on what the bill means for the country’s budgetary deficit in the country.
A concern of 2.4 billions of dollars
A report published last week by the Office of the Budget of the Non -Supportis Congress (CBO) indicates that the tax reductions in the bill, which apply to tips, overtime and higher benefits, total 3.7 billions of dollars.
Although this means that taxpayers will keep more from their money, this also represents a significant reduction in federal income. When the CBO analyzed whether the discounts of spending proposed by the bill would compensate for this reduction, they concluded that it would fail for 2.4 billions of dollars over the next 10 years.
Essentially, although the bill saves 1.3 billion of dollars thanks to program discounts, the overall impact is an increase of 2.4 billions of dollars in the national deficit.
This uncompined gap is what worries financial analysts and economists.
Will the Trump Budget Budget bill aggravate the deficit?
Since tax reductions are not entirely offset by its expense reductions, the government will have to borrow more money to cover its expenses. Borrow more will also increase total national debt.
“From there, this is a simple economy: more debt means more obligations, higher yields and more strict conditions,” said Liu to Beincrypto.
According to the CBO, over the next 10 years, the additional loan caused by this bill should lead to $ 551 billion in additional interest payments. This amount is greater than the government would already pay on its existing debt.
This additional loan considerably increases the total cost of the invoice, going beyond the direct impact of its tax and expenses. It also creates a composition effect: more government loans lead to higher payments of interest, which can then require even more distant loans.
This budgetary backdrop is already manifested in key economic indicators.
Growing bond yields and economic tension
Less than three weeks ago, the absence of bonds gives frightened investors while the return on bonds at 30 years has exceeded the 5% mark for the first time since October 2023.
“When the yield of 30 years breaks 5%, it is not only a market statistic – it is a warning. Interest payments are now one of the quickest line elements in the federal budget, and in part of the GDP, they approach the historic summits.
The rates of significantly higher bonds have great implications, which makes life more expensive for everyday Americans. Many common loans, such as mortgages, credit card rates and car loans, are directly linked to treasury yields, the increase in bond yields increases.
This escalation in borrowing costs could slow down economic activity, thwarting the stimulating effects of any legislation on tax reductions. Aware of this, investors have already expressed their discomfort.
Do markets lose patience with American debt?
Following approval by the chamber of the Trump budget bill on May 22, the indices through the stock market experienced a slowdown.
Illustrated more Wall Street’s discomfort, the 30 -year bonds last month were poorly received, investors demanding higher return than expected to buy obligations. Its low April auction has echoed this lack of high demand, signaling a public perception of America as a more risky investment.
This current Wall Street reaction to national debt contrasts strongly with historical responses. In the past, the financial markets have often shown more leniency, especially when the rates were low or the crises requested action.
“Wall Street gave Washington more soft on deficit expenses … But today, this cushion has disappeared. With high interest rates, a hot air balloon debt and no immediate emergency to justify it, the markets are much less indulgent,” said Liu.
At the same time, these significant budgetary pressures could also cause a global training effect.
“American fiscal tension increases global borrowing costs, weakens emerging markets and puts pressure on economies that organize large reserves of treasury bills. The effects are not limited to the United States.
While confidence in the traditional safe paradise described, investors could increasingly be attracted to alternative assets such as cryptocurrencies.
Haven de Bitcoin’s call, Altcoins under pressure
The budgetary tension of the reconciliation bill could transform the feeling of investors towards the cryptocurrency market. However, not all digital assets are created equal in this regard.
“Bitcoin could shine in this uncertainty, but altcoins could face harder opposite winds as investors become more cautious,” Liu in Beincrypto told.
As the government’s loan increases and concerns about the inflation or stability of traditional assets increases, Bitcoin may undergo a renewed call.
An uncertain environment poses a challenge for altcoins, which are generally more risky and more volatile than bitcoin. Consequently, investors can prioritize the preservation of capital on speculative gains, leading to their underperformance. This change means that altcoin prices decrease or stagnate, while Bitcoin can maintain its value or even increase.
If the bill adopts the Senate with a minimum modification of its budgetary impact, these are probably certain potential results to expect.
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