Bitcoin Soars on US Fiscal Policy Fears, Not Crypto Legislation
Bitcoin's price has surged to over $72,000 in recent days, and experts at VanEck attribute this rally to fears about US fiscal policy rather than potential legislation affecting the crypto market. According to Matthew Sigel, head of digital asset research at VanEck, Bitcoin is behaving like a hedge as it was designed to be.
The US Treasury's decision to double its long-dated bond buyback ceiling from $2 billion to at least $4 billion per operation has compressed yields and contributed to a broader risk-on rally. This move has also led to roughly $3 billion in forced short liquidations, which has further amplified the price increase of Bitcoin.
Sigel downplays the significance of the CLARITY Act, a bill currently working its way through Congress aimed at regulating the crypto market structure. Despite some optimism from Coinbase CEO Brian Armstrong that the bill will pass with 60 Senate votes, prediction markets indicate only a slim chance it will become law this year.
Bitcoin's correlation with US equities has increased, rather than decreased, during times of market stress, such as the 2020 COVID crash and the 2022 rate-hiking cycle. This pattern challenges the idea that Bitcoin is a reliable hedge against risk.