Trump’s “Big Beautiful Building” touts fiscal discipline, but Wall Street is at high alert on $2.4 trillion in debt, which adds to the already wary deficit in the US. In the meantime, bond yields continue to soar, with uncertainty about the US Treasury Department, as shelters are looming.
Vincent Liu, Chief Investment Officer at Kronos Research, told Beincrypto that these factors could further drive demand for Bitcoin. Meanwhile, Altcoins may not be carried either.
Trump’s economic vision meets early rebound
The Trump administration welcomes one big beautiful bill and serves as an important legislation that dramatically improves the US financial trajectory.
The bill passed the House of Representatives in May, awaiting approval from the Senate. It will unlock trillions of dollars with tax cuts and will deliver significant spending on healthcare, food stamps and clean energy programs.
The White House has asserted that the bill will pave the way for an “era of unprecedented economic growth,” but others aren’t that sure.
In addition to Elon Musk’s reference to the law as “unpleasant hatred,” Wall Street was particularly unsettled. That fear has echoed heavily, especially about what the country’s bulging fiscal deficit bill meant.
2.4 trillion dollar concerns
A report released last week by the Non-Participant Congressional Budget Office (CBO) shows a total of $3.7 trillion applied to the bill’s tax credits, tips, overtime and senior benefits.
This means taxpayers will keep more money, but it also represents a significant cut in federal revenue. When the CBO analyzed whether the proposed spending cuts in the bill would offset the cuts, they concluded that it would be a $2.4 trillion shortfall over the next decade.
Essentially, the bill will save $1.3 trillion through program cuts, but the overall impact is an increase of $2.4 trillion in the national deficit.
That unrecorded gap is what worries financial analysts and economists.
Will Trump’s budget bill make the deficit worse?
Given that tax cuts are not completely offset by spending cuts, the government must borrow more money to cover the costs. More borrowings also increase the total debt of national debt.
“From there, it’s simple economics. More debt means more bonds, higher yields, and more severe circumstances,” Liu told Beincrypto.
According to the CBO, over the next decade, additional borrowings caused by the bill are projected to result in an extra $551 billion in interest payments. This amount exceeds what the government already pays for existing debts.
This additional borrowing will significantly increase the total bill costs, exceeding the direct impact of tax and expenditure clauses. It also creates compound interest effects. As government borrowings increase, interest payments will increase and more borrowing will be required.
This financial background has already manifested itself in important economic indicators.
Surge in bond yields and economic tensions
With less than three weeks on, the bond rises to surprise investors as 30-year bond yields surged above 5% for the first time since October 2023.
“When 30-year yields break 5%, it’s not just a market statistic, it’s a warning light. Currently, interest payments are one of the fastest growing line items in the federal budget, and as a share of GDP, they’re trapped at historic highs.
A significantly higher bond rate has a wide range of meanings and makes life more expensive for everyday Americans. Many common loans, such as mortgages, credit card fees and car loans, are tied directly to Treasury yields and rise as bond yields increase.
This escalation of borrowing costs could slow economic activity and counteract the stimulating effects of the tax cuts Act. Recognizing this, investors have already expressed their concerns.
Is the market losing patience in our debt?
Following the House of Representatives’ approval of Trump’s budget bill on May 22, the stock market overall index has experienced a recession.
Last month’s 30-year bond auction, which further explained Wall Street’s uncertainty, was not accepted, with investors buying the bond demanding higher yields than expected. The weak performance at the auction in April reflects this lack of strong demand, indicating the perception of the American public as a high-risk investment.
This current response from Wall Street to national debt is in stark contrast to the historical response. In the past, financial markets often showed more tolerance. Especially when the fees are low or when the crisis calls for action.
“Wal Street once had more deficit spending in Washington, but today its cushion is gone. There are no high interest rates, inflated debts, and no immediate emergency to justify it, but the market is not tolerant,” Li said.
At the same time, these important financial pressures can also cause global ripple effects.
“US fiscal tensions increase global borrowing costs, weaken emerging markets, and put pressure on the economy with large Treasury offices. The impact is not limited to the United States, which directly affects the financial stability of the global economy as a whole,” he added.
As trust in traditional, safe havens wanes, investors may be increasingly drawn to alternative assets such as cryptocurrencies.
Bitcoin’s safe haven, altcoin under pressure
The financial tensions in the settlement bill could turn investors’ sentiments into a cryptocurrency market. However, not all digital assets are created equally in this respect.
“Bitcoin may shine with its uncertainty, but as investors become more cautious, altcoins may face harsher headwinds,” Liu told Beincrypto.
As government borrowing increases and concerns about inflation and traditional asset stability grow, Bitcoin may experience new appeal.
An uncertain environment usually presents challenges for altcoins that are more risky and volatile than Bitcoin. As a result, investors prioritize capital preservation over speculative profits, which can lead to poor performance. This shift will lower or stagnate Altcoin’s prices, but Bitcoin can even retain its value or rise.
These are probably potential consequences that could be expected if the bill passed the Senate with minimal changes to its financial impact.
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