Bitcoin Faces 10% Drop Due to Trump's Tax Bill

Bitcoin, the leading cryptocurrency, could experience a temporary price drop to around $90,000 due to the potential impact of President Trump’s “Big, Beautiful Bill.” This bill, which aims to slash taxes and increase the debt ceiling, is expected to be signed into law on Independence Day. Arthur Hayes, the co-founder of BitMEX and current chief investment officer at Maelstrom Fund, has expressed his concerns about the bill's potential effects on the cryptocurrency market.

Hayes argues that the bill could lead the U.S. Treasury to borrow more, potentially draining liquidity from markets. This liquidity drain, estimated to be about $500 billion, could temporarily drag Bitcoin’s price to the $90,000 to $95,000 range. Despite this potential short-term correction, Hayes remains optimistic about Bitcoin’s long-term price action, suggesting that a smooth market absorption of the bond issuance could keep Bitcoin stable above $100,000.

Hayes has previously predicted that the U.S. central bank’s monetary policy, specifically money printing, would eventually be a boon for Bitcoin and other crypto assets. He has forecasted that Bitcoin could skyrocket in the coming months to smash $250,000 before the end of 2025. This rocket surge will be bolstered by the U.S. Federal Reserve accelerating money printing to curtail the ballooning national debt.

Hayes also suggests that the government's interest in stablecoins is not primarily about solving payment issues but rather about cutting the deficit. Stablecoins are digital tokens pegged to the value of non-volatile assets, usually dollars. The Senate recently passed legislation that creates a framework for issuing and trading stablecoins in the U.S. Hayes suggests that this law could stop private companies from issuing stablecoins, allowing big banks to use the digital tokens to buy up U.S. treasury bills as a way of reducing debt.

In summary, while Hayes anticipates significant volatility ahead for Bitcoin, he remains bullish on its long-term prospects. He advises caution in the short term due to the potential impact of President Trump’s “Big, Beautiful Bill,” but believes that Bitcoin will continue to push upwards thereafter. His predictions underscore his belief in the long-term potential of Bitcoin, despite the short-term volatility he anticipates.