While the crypto market is waiting for direction, Janet Yellen calls for more funding to run her agency and improve tax collection, while the proposed budget for the next fiscal year will bring US federal spending to the highest sustained level since World War II.
The price of Bitcoin is chopping between $32k and $42k, and Ether continues to trade around $2,800, but the market is not sure about what’s to come next. The total market cap is also stuck at around $1.7 trillion.
It is expected that Bitcoin may continue to trade sideways for months before it goes on to hit new highs.
Not to mention, the market is yet to get any clarity on China banning Bitcoin and mining. However, energy regulators of Sichuan are having a meeting with local power companies to analyze the impact of crypto mining.
Meanwhile, in the US, on the regulatory front, SEC Chair Gary Gensler is repeating what he has been saying since joining the agency.
This week, in prepared testimony to the financial services and general government subcommittee of the U.S. House Appropriations panel, he will tell lawmakers that cryptos are a highly volatile and speculative asset class that creates the risk of investor fraud and marketplace manipulation.
Not Enough Power?
In the short-term, things might remain uncertain, but in the medium-term and long-term, things are surely looking bright, and crypto is definitely here to stay.
A lot of new interests have been seen from institutions lately, with Ray Dalio, founder of the world’s largest hedge fund Bridgewater Associates revealing that he owns some Bitcoin and billionaire investor Carl Icahn sharing his plans to invest in crypto in a “big way” that involves over a billion dollars.
“Volatility may not be different this time, but everything else is,” commented trader and economist Alex Kruger.
When leverage resets, shallow dips higher are maximally painful. There is not enough salt in the world for a fomo bull candle.
— Kyle Davies (@kyled116) May 26, 2021
As we reported, during this recent deep correction, short-term buyers, particularly those who bought after February, were the ones who sold their crypto assets.
Interestingly, “investor whales” were the ones who bought 77,000 BTC last week’s pullback, as per Chainalysis’s latest report.
Expansive Fiscal Policy
“Tapering” has started to be heard at times after making it in the Federal Reserve’s minutes. Fed Vice Chairman Randy Quarles is actually the latest one to talk about gradually reducing the amount of stimulus because he is “quite optimistic about the path of the economy.”
But those in support of “tapering” are very few and far between. Even US President Joe Biden is not done with pouring more money into the markets.
He is now proposing a $6 trillion budget for the next fiscal year, which will bring US federal spending to the highest sustained level since World War II. Also, the Fed continues to be dismissive of inflation worries.
This will be Biden’s third domestic funding proposal of his presidency. His plan includes the American Rescue Plan of $1.9 trillion, a sequel to the $2.2 trillion pandemic relief bill, which was passed in March, the American Jobs Plan of $2.3 trillion, and the American Families Plan of $1.8 trillion for which the Biden administration detailed $1 trillion in new spending and $800 billion in tax credits this week.
Adding to this, today, Treasury Secretary Janet Yellen came out pretty strong in favor of spending. Yellen urged congressional leaders to have a more expansive fiscal policy, saying the government is operating on a budget that is behind the time of over a decade and that inflation-adjusted spending has remained stagnant for 11 years.
“We cannot continue to be good stewards of this recovery – and tackle the new bodies of work that Congress assigns to us in the years beyond – with a budget that was designed for 2010,” Yellen said in prepared remarks to the subcommittee on financial services and general government committee on appropriations.