The Potential Impact of Opportunity Economy Framework on the Crypto Assets Market

This week, the market has entered a wait-and-see period ahead of the Jackson Hole meeting. Investors are looking forward to Federal Reserve Chairman Powell's comments on the latest employment and inflation data, and clear guidance on future monetary policy, which will serve as an important reference for the September interest rate decision.

It is worth noting that the Democratic presidential candidate recently announced the first economic policy framework - "Opportunity Economy". This framework aims to lower the living costs of the American people through government policies in four areas: housing, healthcare, food, and childcare. If implemented, it could drive the Crypto Assets market to replicate the upward trend of 2021, but it may also reignite inflation in the United States.

Reduce American Family Cost Agenda - $1.7 Trillion Subsidy Plan

With the official nomination as a presidential candidate, the momentum of a certain candidate has clearly increased, with poll data at one point exceeding that of opponents. Although the poll results are subjective, they also reflect the strength of the candidate's campaign team, which should not be underestimated. Therefore, it is necessary to actively monitor and analyze their possible policy direction.

For a long time, the candidate has been questioned for the lack of clear economic policy preferences. However, the recently released "Reducing American Family Costs Agenda" document has sparked significant controversy. This is an extremely leftist economic policy aimed at reducing the living costs of the American people through government intervention in four areas:

Housing aspects:

1. Call for the construction of 3 million new housing units within four years, stimulating housing construction through tax incentives and a $40 billion federal innovation fund.

2. Crack down on corporations and large landlords to prevent Wall Street investors from buying and price-gouging homes.

3. Provide a $25,000 down payment subsidy for first-time homebuyers, with the quota expanded to 4 million.

Medical aspects:

1. Set a cap on out-of-pocket costs for insulin and prescription medications.

2. Accelerate negotiations for prescription drugs under health insurance.

3. Crack down on the misconduct of pharmaceutical companies and medical intermediaries, and enhance industry transparency.

in terms of food and daily necessities:

1. Promote the ban on food and grocery price fraud.

2. Establish rules to limit large companies from obtaining excessive profits from food and groceries.

3. Grant regulatory authorities new powers to investigate and penalize non-compliant companies.

Parenting:

1. Tax reduction for middle-class families with children, with a maximum credit of $3,600 per child.

2. Provide a $6,000 tax credit for families with newborns in their first year.

3. Tax deductions for dual-income families and health insurance purchases.

The plan promises to begin implementation within the first 100 days of taking office. However, it has also sparked considerable controversy, mainly focusing on housing and food essentials policies, as well as the overall budget. Opponents argue that the radical housing policy will increase government debt, while the food essentials policy goes against market principles.

Non-profit organizations estimate that the plan will lead to an increase in government deficits of $1.7-2 trillion over the next 10 years, potentially exacerbating the debt crisis, pushing up inflation, and increasing social tensions due to the higher tax burden on the wealthy. Following the announcement of the bill, both the dollar index and gold experienced significant fluctuations.

Impact on the Crypto Market - Short-Term Bullish and Long-Term Bearish

The bill primarily benefits the American middle class, which accounts for over 50% of the population. If implemented, it will significantly reduce living costs for these families in the short term and increase disposable income. This will create conditions for the rise of risk assets, especially high-growth technology assets.

This scene played out in 2021. At that time, the Biden administration's $1.9 trillion COVID-19 relief package led to a surge in disposable income for American households, igniting a bull market in the crypto assets industry, led by Bitcoin. However, it also triggered severe inflation, forcing the Federal Reserve to implement monetary tightening for over two years.

Therefore, if economic policies of a similar scale are implemented, it will benefit Crypto Assets in the short term, but in the medium to long term, caution must be taken regarding the monetary policy risks brought about by the potential return of inflation. Of course, this requires the candidate to win the election and effectively implement the policies, which is worth continuous attention.