Another $2 Trillion In Spending Is On The Way

The House passed another $2 trillion in spending days after Biden signed the infrastructure bill into law. Inflation levels are one of the most significant risks facing U.S.-based investments. The Senate is preliminarily considering walking back some of the stringent Bitcoin regulations introduced in the infrastructure bill. Bitcoin’s price took a hit in anticipation of short-term supply increases from Mt. Gox payouts.

Inflation Stays High

The House passed the $2 trillion “Build Back Better Bill” without a single Republican vote for the bill. The plan includes large carve-outs for climate initiatives, childcare, and healthcare, among other policies. The plan was reduced from an initial proposal of $3.5 trillion due to opposition from moderate Democrats who were worried about inflationary pressures. Inflation continues to be felt across a wide range of goods. The median home price in the U.S. is up 16% from one year prior. Certain regions which have grown more popular recently due to work-from-home possibilities, such as counties in Texas and Florida, saw housing prices rise by over 30%. In the last month, consumer spending has picked up slightly, with increased demand for goods likely to drive additional near-term price increases.

The United States Continues to Refine Bitcoin Regulation

Ted Cruz has introduced a bill that would repeal the cryptocurrency tax reporting provisions introduced by the recently passed infrastructure bill. Cruz told fellow Senate members that they “shouldn't regulate something [they] don't yet understand” and cited concerns about driving cryptocurrency innovation to other countries, namely China. Cruz intends to strike all cryptocurrency-related legislation introduced in the infrastructure bill and then revisit regulations in a slow and measured manner. It's unclear how much support his initiative has received from the rest of the Senate. The U.S. Justice Department will sell $56 million worth of cryptocurrency seized during a crackdown on the BitConnect scam. India intends to formally legalize the holding of cryptocurrencies while simultaneously prohibiting their use in transactions.

Bitcoin Pullbacks Ahead of Mt. Gox Payouts

Bitcoin is trading around $56,500 at the time of writing, down 18% from recently set all-time highs around $69,000. The recent price downturn resulted in significant profits for sellers of Bitcoin calls and other short Bitcoin positions. November 19th saw roughly $1 billion worth of Bitcoin calls expire worthless, representing massive losses for Bitcoin bulls. Mt. Gox’s settlement plan has received approval and is expected to begin payouts in the coming months. The company has roughly 142,000 bitcoins to fund these payouts, less than 20% of the 850,000 bitcoins the firm controlled at the point of its infamous collapse. Anticipated selling pressure from investors receiving payouts is believed to be a primary factor in Bitcoin’s recent pullback.

Market Recap

Inflation concerns are still top of mind for most investors. However, the Democratic party is undeterred in its spending measures, with plans to introduce several trillion dollars in new initiatives. Legislators are also refining their Bitcoin regulations in a process that has been primarily Bitcoin-friendly, despite some harmful developments. Mt. Gox’s payouts may drive some short-term selling pressure but shouldn’t have any long-term implications.