Biden announces a new $6 trillion federal spending budget, Bitcoin solves the $40,000 problem

Bitcoin (Bitcoin) With US President Joe Biden’s announcement of a new $6 trillion federal spending budget proposal, the final liquidation of $40,000 at the expense of U.S. dollars may be boosted.

On May 28, the President of the United States will announce a large-scale fiscal policy to ensure investment in major infrastructure, education and medical projects. This is the largest fiscal policy since World War II. Reported The New York Times on May 27.

According to reports, Biden hopes the federal government will spend $6 trillion in 2022. He also plans to increase total expenditures to US$8.2 trillion by 2031.

Biden had earlier proposed a substantial tax increase on America’s wealthiest companies and individuals to fund his huge spending plan. But according to The Times, the government will not be able to reduce its budget deficit until at least 2030. This means that the United States will face a huge debt burden when borrowing money to fund Biden’s record-setting proposal.

The U.S. federal deficit has surged from $4.17 trillion in January 2020 to $7.92 trillion in May 2020.

According to recent history, this scenario is the ideal bullish support for Bitcoin. As the U.S. government increased spending to unprecedented levels to combat the coronavirus pandemic, decentralized cryptocurrencies have risen by 1,582% from a low of $3,858 in March 2020.

On the other hand, the U.S. Dollar Strength Index (DXY), which measures the strength of the U.S. dollar against a basket of major foreign currencies, fell by as much as 13.38% after peaking in March 2020 after the global market crash.

Despite the rebound in 2021, the downward trend of DXY still exists. Source: TradingView.

Simultaneously, Anthony “Boom” PomprianoThe well-known Bitcoin lobbyist and founder of Pomp Investments predicts that US dollar bids will fall further.

Pompriano said: “The government proposes to make our country more indebted, while destroying the value of our currency.” Say. “Historicists will write that as citizens cheered, the government accelerated the destruction of the world’s reserve currency.”

Other analysts have also actively proposed to provide bitcoin with a fixed supply as a remedy for the steepening of the US debt curve.

Bitcoin recovers $40,000

The “New York Times” report caused anxiety during the early morning trading hours in the United States. When the New York market opened, the DXY index fell slightly by 0.01%, while Bitcoin recovered $40,000.

Bitcoin broke through $40 in the early trading session in New York. Source: TradingView

The BTC/USD exchange rate tested its 200-day simple moving average (the orange wavy line in the chart above) (located around $40,756) in order to break upward.

If this goal is achieved, the currency pair will close above its 20-day exponential moving average (green wave) (near $43,655) to confirm its short-term bullish bias.