Trump’s Big Beautiful Bill Spurs Crypto Market Shifts as Fed Holds Rates and NY AG Fights Stablecoin Law

Fiscal Expansion, Dollar Pressure, and Regulatory Conflicts Shape Bitcoin and Stablecoin Outlook

Donald Trump’s $3.3 trillion fiscal package, dubbed the “Big Beautiful Bill,” has passed the U.S. Senate and is awaiting a final House vote, marking a pivotal moment for markets grappling with inflationary fears and swelling debt. The bill, projected to increase the national debt by over $3 trillion, has intensified concerns around fiat currency debasement and set off a fresh wave of pro-Bitcoin sentiment among leading investors and analysts. 

Matt Hougan, Chief Investment Officer at Bitwise Asset Management, said the bill signals a clear call to “buy Bitcoin now,” citing the federal government’s inability to rein in deficits as a growing risk. He noted that policymakers have shown no viable route to spending cuts, reinforcing the appeal of non-fiat assets like Bitcoin. Drawing from macro strategist Lynn Alden and echoing Ray Dalio’s long-held views, Hougan warned that “the easiest thing for politicians to do is to debase their currency to inflate away their debt.”

Bitcoin, designed with a fixed 21 million coin supply, has once again emerged as a hedge against the erosion of purchasing power. Hougan emphasized that the dollar’s relative strength against other fiat currencies like the euro and yen conceals its broader weakness when measured against real assets such as Bitcoin, gold, and real estate. Foreign exchange markets tend to move in decade-long cycles, and he believes the U.S. is now entering an extended phase of dollar devaluation. 

Though another sharp annual decline in the dollar is unlikely, Hougan made clear that “the general direction is down,” underscoring why long-term investors are increasingly favoring crypto assets over traditional ones. From a short-term macro view, he conceded that government spending might bolster GDP temporarily, but warned that sustained deficit expansion justifies exposure to decentralized assets not tied to fiat. These dynamics have contributed to a stronger crypto price index, despite volatility in broader markets.

Meanwhile, Fed Chair Jerome Powell offered sharp criticism of Trump’s fiscal and trade strategies during a European Central Bank forum, pointing to the administration’s tariff unpredictability as a primary reason for delaying interest rate cuts in 2025. Powell confirmed he would have considered easing policy earlier if not for the inflationary risks stemming from Trump’s economic agenda. His cautious stance has had a direct impact on Bitcoin price movements, with the coin market cap seeing minor pullbacks. 

On July 2, Bitcoin dipped 1.3% to $105,859, reflecting investor hesitation in the face of uncertain Fed direction. Powell dismissed Trump’s ongoing public pressure—Trump recently called Powell a “stubborn mule”—and reiterated that the Federal Reserve is committed to a “wait and see” approach. He also weighed in on crypto regulation, signaling tentative support for stablecoins under a consistent state and federal framework, calling it necessary “if we’re going to have stablecoins, and apparently we are.”

As Congress prepares for a vote on the GENIUS Act and the Digital Asset Market CLARITY Act the week of July 7, political tensions are heating up. The GENIUS Act, which passed the Senate with a 68-30 vote, proposes the first national framework for stablecoins—requiring 1:1 backing with U.S. dollars or equivalent liquid assets, monthly reserve disclosures, and bankruptcy consumer protections. 

But New York Attorney General Letitia James has voiced strong opposition, calling the legislation “a danger to investors, the economy, and national security.” In a formal letter to Congress, James argued that the bill under-regulates stablecoin issuers compared to traditional banks and lacks essential oversight mechanisms. She called for stablecoin firms to be treated like banks—with FDIC-backed insurance, stronger fraud safeguards, and mandatory digital ID verification to prevent illicit use. James also criticized offshore stablecoin operations and warned that stablecoins could erode the viability of community banks in underserved regions.

Trump, however, remains a vocal supporter of the GENIUS Act, demanding swift passage on Truth Social with a message reading: “Get it to my desk, ASAP—NO DELAYS, NO ADD ONS.” Despite bipartisan Senate support, the bill’s reception in the House may be shaped by these regulatory concerns, as well as competing visions for digital asset governance. James also slammed the CLARITY Act for allegedly protecting bad actors and giving too much leeway to crypto firms while neglecting consumer protection. Her prior positions have included banning crypto in retirement accounts and restricting offshore stablecoin issuers—adding to the mounting legal and political pressure facing the digital asset industry. 

At the same time, the final Senate version of Trump’s fiscal package excluded key crypto tax incentives such as staking deductions and better treatment for crypto-holding businesses, despite strong lobbying efforts. With crypto policy sitting at the intersection of fiscal expansion, regulatory divergence, and monetary restraint, the coin market cap and broader crypto price index now stand at a crossroads shaped by unprecedented policy shifts.

This article has been refined and enhanced by ChatGPT.