The Great Reset Enters Phase two

Phase 1 (Trade Policy) was characterized by the trade war panic, which led to lower prices for energy, food, and shelter. However, it failed to lower interest rates.
Phase 2 (Tax-Regulatory Policy) aims to instill confidence in the bond market, thereby lowering rates while accelerating economic growth.

In short order, Tax policy would hyper-charge US GDP growth while the Genius Act would help absorb US Treasury debt, adding liquidity and stabilizing interest rates.

Currently, the Bond market is pushing back against Trump's Tax policy 👇🏽

As long as interest rates remain above 4.5%, markets will struggle to return to their previous highs; this presents a significant headwind.

• If rates surge above 4.5%, expect a pullback
• If rates ease below 4.5%, expect a rally

The MOVE index👇🏽 is something to keep an eye on, as it measures confidence in the US Bond Market. Up bad, down good. /

This concern from the bond market isn't so much about 2025 growth concerns or inflation, but rather the heightened probability of a future financial crisis if fiscal policies contribute to the US debt outpacing GDP growth. If the debt burden erodes US growth, it would eventually lead to an economic crisis, as reflected in the downgrades of US credit by credit agencies.

How the GENIUS Act Could Help Fund the Deficit

Stablecoin Reserve Requirements:

• • The GENIUS Act mandates that stablecoin issuers back their currencies 100% with highly liquid assets, such as U.S. dollars, short-term U.S. Treasury bills, or similar instruments.
  • This requirement incentivizes issuers to hold significant amounts of Treasury bills, as these are safe, liquid, and align with the bill’s focus on stability and consumer protection.

Increased Demand for Treasury Bills:

• • Stablecoin issuers, particularly those with large market caps (e.g., issuers like Tether or Circle, managing billions in assets), would need to purchase substantial volumes of Treasury bills to meet reserve requirements.
  • For context, the global stablecoin market was valued at over $130 billion in 2024, and growth is projected to continue. If even a portion of this is allocated to Treasury bills, it could significantly boost demand for U.S. government debt securities.

Lowering Interest Rates:

• • Increased demand for Treasury bills typically drives up their prices, which inversely lowers their yields (interest rates). Lower yields mean the U.S. government can borrow at reduced costs.
  • For example, if stablecoin issuers collectively purchase billions in short-term Treasuries, this could suppress yields on these securities, reducing the government’s interest payments on new debt issuances.

Funding Government Spending:

• • By purchasing Treasury bills, stablecoin issuers directly provide funds to the U.S. government, which issues these securities to finance its operations and cover deficits.
  • The federal deficit was projected at $1.9 trillion for 2025 by the Congressional Budget Office. Increased Treasury purchases could help absorb a portion of this borrowing need, effectively funding government spending without requiring new taxes or cuts elsewhere.

Economic Multiplier Effects:

• • Stablecoin issuers’ purchases of Treasuries inject liquidity into the financial system, as the government spends these funds on programs, infrastructure, or debt servicing.
  • Lower Treasury yields could also reduce borrowing costs across the economy, potentially stimulating private-sector investment and growth, indirectly boosting tax revenues to offset the deficit.

If the Genius Act passes, Altcoins EXPLODE!

Total Cryptomarket minus BTC