Nearly every key metric indicates that the U.S. is experiencing extremely elevated levels of inflation. Large spending packages are likely to exacerbate rising inflation and may force additional interest rate hikes. El Salvador’s plan to use Bitcoin as legal tender continues to take shape.

U.S. Government Pushes Additional Spending Despite Impacts of Inflation

Janet Yellen has called for an increase to the debt limit, telling legislators that she would “really urge prompt action on raising the limit or suspending it.” Atlanta Fed President Raphael Bostic increased his estimate for heightened inflation levels, noting that “rather than it being two to three months it may be six to nine months." The average price of U.S. homes rose 24% in the last year, marking the largest annual increase since 1999. The personal expenditures price index has risen 3.4% since May 2020; the largest gain since 1992. Joe Biden joined 11 Republican and 10 Democratic senators in support of a tentative infrastructure deal. The plan calls for $579 billion in new spending, but it is unclear where all of the new funding will come from.

Bitcoin Becomes More Accessible Globally

El Salvador is incentivizing Bitcoin adoption by offering $30 to any citizen who signs up for the country’s digital wallet “chivo.” The American University of Panama will accept tuition payments in Bitcoin starting in August. QR Capital officially launched its Brazilian Bitcoin ETF, making it the first Bitcoin ETF in Latin America. 3iQ launched a Bitcoin ETF in Dubai, largely due to a desire to expand the available trading hours of Bitcoin exposure on stock exchanges. China’s crackdown on Bitcoin mining has continued, forcing operations to relocate to countries such as the United States, Australia, and Kazakhstan. The current NYC mayoral frontrunner Eric Adams intends to make the city the “center of Bitcoin” and compete with Miami’s Bitcoin incentives.

U.S. Financial Institutions Continue Adding Bitcoin To Their Business Model

Andreessen Horowitz has announced a $2.2 billion fund focused on companies in the cryptocurrency space. Citigroup launched its “Digital Asset Group”, which will be a part of the firm’s broader wealth management division. NYDIG and Fiserv have created a partnership that will allow financial institutions to offer Bitcoin services to their clients. ARK Invest purchased an additional 1 million shares of GBTC for nearly $30 million when the price of Bitcoin shortly dipped below $30,000. Elon Musk and Jack Dorsey have scheduled a discussion of Bitcoin at “The B Word” event on July 21st. Kevin O’Leary plans to increase his Bitcoin allocation to 5% because “everyday we move towards more adoption at the institutional level.”

Market Recap

Biden and Yellen appear dedicated to large spending measures, despite indications that the country is already experiencing high inflation levels. El Salvador is leading Bitcoin adoption in Latin America, with many other Latin American countries following its lead. Notable investors and financial institutions continue to make new Bitcoin investments and product offerings.