The United States Senate is on the cusp of approving a $1.7 trillion spending bill which has been delayed by weeks due to several policy disagreements on critical aspects such as immigration and levels of funding. The breakthrough came on Thursday after a deal was made on possible amendments allowing Congress to beat the Friday deadline for the bill, which will fund government programs until September 30th, 2023.

The bill includes $45 billion in emergency funding for Ukraine and NATO allies. There is also $772 billion for non-defence programs and $858 billion in defence funding.

The Spending Bill Could Hinder the US Fed’s Fight on Inflation

However, the 4,155-page document has met stiff opposition in and out of Washington, DC. For example, Representative Dan Bishop of the Ninth District of North Carolina tweeted that the bill was too long to be passed as fast as it was. He also pointed out that some of the planned spending in the bill might be questionable, including the $65 million set aside for the recovery of Pacific Salmon populations.

Twitter’s owner and CEO, Elon Musk, also held a poll on the spending bill in which an overwhelming 71% of participants voted against the bill.

US Representative Mike Turner of the 10th District of Ohio also voiced concerns that the bill demonstrated ‘out of control spending from Washington that is driving inflation.’

Bitcoin Could Turn Bullish Once the Bill is Passed

Therefore, it is only logical to assume that the US Federal Reserve will have to turn back on its money printer to cater for the $1.7 Trillion required by the US government.

Such a move will likely slow down the central bank’s efforts in taming inflation, thus reigniting interest in Bitcoin as a hedge against the same devaluation of the US dollar through money printing.

In his most recent blog post, Bitmex’s founder and former CEO, Arthur Hayes, had anticipated such a scenario.

He explained:

‘I don’t know if $15,900 was this cycle’s bottom. But, I do have confidence that it was due to the cessation of forced selling brought on by a credit contraction.

‘I don’t know when or if the US Federal Reserve will start printing money again. However, I believe the US Treasury market will become dysfunctional at some point in 2023 due to the Fed’s tightening monetary policies. At that point, I expect the Fed will turn the printer bank on, and then boom shaka-laka — Bitcoin and all other risk assets will spike higher.’

Fears of a Global Recession are Still Evident

The only factor standing in Bitcoin’s way of returning to its winning ways is the looming global recession forecasted to begin in 2023 and possibly run through 2024. A recession will likely be confirmed by the end of the first quarter of 2023 after earnings reports for Q4 2022 and Q1 2023 are compared, thus providing a more confident sign of a Bitcoin bottom.

(by John P. Njui)