A Note on the "Big Beautiful Bill" and Its Impact on the Crypto Market
On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act (OBBBA), colloquially known as the "Big Beautiful Bill," into law. This sweeping budget reconciliation act, passed with narrow margins in a deeply divided Congress, has sparked widespread debate due to its ambitious tax cuts, increased debt ceiling, and significant reductions in social programs. While the bill does not explicitly target cryptocurrencies, its macroeconomic implications are poised to reshape the crypto market, particularly for assets like Bitcoin. This post explores the OBBBA’s key provisions and their potential effects on the cryptocurrency landscape, drawing on recent analyses and market reactions.
Understanding the Big Beautiful Bill
The OBBBA is a cornerstone of Trump’s second-term agenda, passed with a 51-50 Senate vote and a 218-214 House vote, facing universal Democratic opposition. Its major provisions include:
- Tax Cuts: Permanent extension of the 2017 Tax Cuts and Jobs Act, temporary deductions for tip income ($25,000) and overtime pay ($12,500) for earners under $150,000, and an increased child tax credit to $2,200.
- Debt Ceiling Increase: A $5 trillion raise, with $150 billion allocated for defense and $170 billion for border security and deportations.
- Social Program Cuts: Over $1.2 trillion in Medicaid reductions, expanded work requirements for SNAP, and defunding of Planned Parenthood for one year.
- Energy Policy Shifts: Phasing out clean energy tax credits and promoting fossil fuels, potentially increasing energy costs.
These policies are expected to increase the federal deficit by $2.8 trillion by 2034, according to the Congressional Budget Office, with some estimates suggesting up to $4 trillion if temporary provisions become permanent. The bill’s fiscal expansion and inflationary potential are key drivers of its impact on the crypto market.
Positive Impacts on the Crypto Market
The OBBBA’s economic policies create several tailwinds for cryptocurrencies, particularly Bitcoin, which is often viewed as a hedge against inflation and currency devaluation. Here’s how the bill could benefit the crypto market:
1. Inflation and Dollar Devaluation
The $5 trillion debt ceiling increase and tax cuts are likely to fuel inflation, weakening the U.S. dollar. The U.S. Dollar Index (DXY) has already seen its worst yearly start since 1973, a trend that historically benefits Bitcoin. Analysts like Nigel Green of deVere Group argue that Bitcoin and gold thrive during inflationary periods, and the OBBBA’s policies could accelerate this dynamic. Arthur Hayes, a prominent crypto commentator, has even projected Bitcoin reaching $1 million by 2028, driven by dollar devaluation and money printing to cover the deficit.
2. Increased Disposable Income
The bill’s tax relief measures, such as deductions for tips and overtime pay, are expected to boost disposable income for middle- and lower-income households. This could lead to greater retail investment in cryptocurrencies, as individuals allocate surplus funds to speculative assets. Additionally, the bill’s pro-business stance, including reduced regulatory focus on green finance, may ease pressures on crypto firms, fostering a more favorable environment for innovation and adoption.
3. Liquidity and Monetary Policy
The OBBBA’s fiscal expansion may prompt the Federal Reserve to adopt looser monetary policies, potentially cutting interest rates to as low as 1%. Such actions would inject liquidity into financial markets, benefiting risk assets like cryptocurrencies. Nic Puckrin of CoinBureau suggests that the bill sets the stage for a “macro-driven Bitcoin expansion,” with current prices potentially viewed as bargains in the future. Market data supports this optimism, with Bitcoin surging 20% and the broader crypto market rising 0.37% following the bill’s passage, according to AInvest.
Potential Challenges for Crypto
Despite these positive effects, the OBBBA introduces risks that could lead to short-term volatility or structural challenges in the crypto market:
1. Short-Term Volatility
The Treasury’s efforts to manage the increased debt by refilling its General Account could drain market liquidity, potentially causing Bitcoin to dip to $90,000 in the near term, as warned by Arthur Hayes. This comes despite Bitcoin’s recent high of $111,814 in May 2025. Such volatility could disrupt the current bull market temporarily, though long-term prospects remain strong.
2. Stablecoin Regulation Risks
While the OBBBA itself does not address cryptocurrencies, related legislative efforts, such as the GENIUS Act, propose allowing big banks to use stablecoins for treasury bill purchases. This could shift control from private issuers to traditional financial institutions, disrupting the stablecoin market, which is critical for crypto liquidity and trading. Hayes has expressed concerns that such regulations could stifle innovation in the sector.
3. Market Instability from Social Program Cuts
The bill’s steep cuts to Medicaid and SNAP, alongside expanded work requirements, are expected to affect over 10 million people, potentially sparking public unrest and market instability. While such uncertainty could drive demand for Bitcoin as a safe haven, it may also introduce volatility as investors reassess risk. The bill’s divisiveness, criticized by economists and progressive groups, adds to this uncertainty.
4. Missed Opportunities for Crypto-Specific Provisions
The exclusion of Senator Cynthia Lummis’s crypto tax amendment, which proposed tax exemptions for staking, mining, and small transactions, was a disappointment for the crypto community. Although standalone bills and the upcoming “Crypto Week” starting July 14, 2025, may address these issues, the OBBBA’s lack of direct crypto provisions limits its immediate benefits for the industry.
Market Reactions and Broader Context
The crypto market has already shown sensitivity to the OBBBA’s passage. Bitcoin’s 20% surge reflects investor optimism about inflationary policies, while broader market gains signal confidence in liquidity-driven growth. However, the bill operates within a complex legislative environment, with upcoming crypto-focused legislation like the CLARITY Act and the STABLE Act potentially amplifying its effects. President Trump’s push for these bills during “Crypto Week” suggests a broader pro-crypto agenda, which could mitigate some of the OBBBA’s regulatory shortcomings.
Public sentiment, however, remains polarized. Polls from Pew and KFF show majority opposition to the bill, with critics like Joseph Stiglitz arguing it exacerbates inequality. This divisiveness could influence market stability, indirectly affecting crypto prices.
Conclusion: A Net Positive with Caveats
The One Big Beautiful Bill Act is likely to have a net positive impact on the crypto market, driven by inflationary pressures, increased disposable income, and potential liquidity injections. Bitcoin, in particular, stands to benefit as a hedge against dollar devaluation, with analysts projecting significant long-term gains. However, investors should brace for short-term volatility due to liquidity drains, stablecoin regulatory risks, and social program cuts that could spark unrest.
As the crypto market navigates this new landscape, staying informed about related legislation, such as the upcoming “Crypto Week” bills, will be crucial. For now, the OBBBA sets the stage for a dynamic period in crypto, with opportunities and risks in equal measure. Investors are advised to monitor macroeconomic indicators, Federal Reserve actions, and regulatory developments to capitalize on the bill’s effects.
For further details, explore resources like Congress.gov, Cointelegraph, and Yahoo Finance.