Bitcoin (BTC) price surged above $40,000 after US President Joe Biden announced his $6 trillion spending budget proposal.
The President of the United States will unveil the biggest borrowing move since the Second World War on Friday, the New York Times reported on May 27.
According to the report, Biden wants the federal government to spend $6 trillion in 2022. It also plans to increase total spending to $8.2 trillion by 2031.
Biden has previously offered tax hikes to America’s wealthiest people to fund his massive spending program. On the other hand, in his own words, it will take at least until 2030 for the government to reduce the budget deficit. This means that the US will face an enormous debt burden to fund Biden’s record bid.
According to the table above, debt amount increased from $4.17 trillion in January 2020 to $7.92 trillion in May 2020.
Looking at recent history, this process serves as a bullish scenario for Bitcoin. The decentralized cryptocurrency was up 1,582 percent from a low of $3,858 in March 2020 as the US government increased its spending in an unprecedented way to fight the coronavirus.
On the other hand, the US dollar strength index (DXY), which measures the strength of the dollar against a basket of foreign currencies, fell as much as 13.38 percent after peaking in March 2020, when the global market crash took place.
Meanwhile, Anthony “Pomp” Pompliano, head of Pomp Investments, a prominent Bitcoin proponent, believes the dollar index will fall further.
“The government is destroying the value of our currency while putting our country in more debt,” Pompliano said. said. “The history books will write that the government destroys the world reserve currency while the citizens support them.”
Other analysts also suggest fixed supply Bitcoin as a remedy to the US borrowing move.
US President Joe Biden set to announce $6 Trillion budget.
Debt as a % of GDP will rise to highest levels since World War II.
— Bitcoin Archive (@BTC_Archive) May 27, 2021
— PlanB (@100trillionUSD) May 27, 2021
Bitcoin regained $40,000
Following the New York Times report, it was observed that DXY had a modest drop of 0.01 percent at the opening of the New York stock market. Bitcoin regained $40,000.
BTC/USD tested the 200-day simple moving average (SMA) at $40,756 to continue its upward move.
If this level is breached, the pair will move above the 20-day exponential moving average (EMA) ($43,655) to continue the short-term uptrend.