Trump's $20 trillion stimulus plan: a "lifeline" for Crypto Assets or an "inflation trap"?

Trump's recent proposal to inject $20 trillion into the U.S. economy by the end of 2025 has caused a huge stir in the financial markets. This figure not only exceeds the combined market capitalization of the four tech giants Microsoft, Apple, Google, and Amazon (approximately $12 trillion), but it also amounts to nearly $60,000 for every American. In the crypto assets market, this news is seen by some investors as a trigger for the next bull market, but a deeper analysis of its policy feasibility, inflation risks, and transmission mechanisms suggests that the true impact of this "capital tsunami" may be far less optimistic than it appears on the surface.

1. The Feasibility of a $20 Trillion Policy: The Real Obstacles Behind the Numbers

1. The "impossible triangle" of funding sources

Achieving $20 trillion in stimulus faces triple constraints of finance, currency, and politics:

• Fiscal issuance: The total budget of the U.S. federal government for the fiscal year 2025 is approximately $6.8 trillion, which is three times $20 trillion. Even with the issuance of special treasury bonds, this will cause federal debt as a percentage of GDP to soar from the current 125% to over 180%, triggering a debt ceiling crisis.

• Currency overissue: If relying on the Federal Reserve to directly purchase national bonds (essentially QE), it will be equivalent to a 150% expansion of the balance sheet. The current total assets of the Federal Reserve are about $7.2 trillion, and such a scale of balance sheet expansion will destroy the credit foundation of the dollar.

• Political Resistance: The Democrat-controlled Senate will never pass such a radical fiscal plan, and the independence of the Federal Reserve also makes it difficult for them to cooperate with "helicopter money" style stimulus.

Conclusion: The plan is more likely a political slogan at the campaign level rather than an executable policy framework. Referring to the 2020 CARES Act, the actual fiscal stimulus reached $2.2 trillion, along with approximately $4 trillion in Federal Reserve asset purchases, totaling $6.2 trillion, which is already a historical limit. The $20 trillion has little possibility of implementation under the current institutional framework.

2. The Time Lag and Loss of Policy Transmission

Even if some funds are approved, it will take 6-12 months from legislation to actual injection into the economy. Experience from 2020 shows that only 37% of the first round of stimulus funds entered the real economy, 28% flowed into the stock market and Crypto Assets, and 35% remained in the banking system. Based on this ratio, the funds that can actually spill over into the crypto market from the 20 trillion are about 1.68 trillion dollars, which is still considerable, but far from the "tsunami" that the market imagines.

2. Inflation Risk: The $20 Trillion "Pandora's Box"

1. The critical point of hyperinflation

The current core PCE inflation in the United States is about 3.2%. If 20 trillion USD is injected, based on the quantity theory of money (MV=PT), with the assumption that the velocity of money (V) remains stable, the price level (P) will rise by about 45%-60%. This means:

• Cost of living: The price of milk may rise from $4/gallon to $6.5.

• Interest rates soar: The yield on 10-year U.S. Treasury bonds could exceed 6% to compensate for inflation expectations.

• Dollar Crisis: The dollar index could plummet by 20%, losing its status as a reserve currency.

2. The "double-edged sword" effect of Crypto Assets

In a high inflation environment, the narrative of Bitcoin as "digital gold" may indeed be reinforced:

• Anti-inflation demand: funds are seeking value-preserving tools, and the market value of BTC may increase from 2 trillion to 5-8 trillion USD (corresponding price of 250,000 to 400,000 USD)

• But the cost is: the Federal Reserve will be forced to maintain ultra-high interest rates (7%-8%), which will severely suppress the valuation of risk assets. During the 2022 interest rate hike cycle, BTC fell from $69,000 to $16,000, which is exactly the result of high interest rates destroying leverage.

Key Paradox: If the 20 trillion stimulus leads to hyperinflation, it may temporarily benefit the Crypto Assets safe-haven narrative; however, the resulting severe monetary tightening will long-term suppress market liquidity.

Three, the real impact on the crypto assets circle: scenario analysis

Scenario 1: Policy partially implemented (Probability 30%)

Congress passes a $3-5 trillion infrastructure and tax relief bill, with the Federal Reserve coordinating easing:

• BTC target: to reach 150,000-180,000 USD within 6 months, with mainstream coins rising 50%-100%.

• Leading assets: ETH (staking yield increase), SOL (ecosystem expansion), INJ (RWA narrative)

• Risk: Rising inflation expectations leading to interest rate hikes starting in Q3 2026, forming a "short bull and long bear"

Scenario 2: Policy failure or significant shrinkage (Probability 60%)

Only through regular fiscal expenditures of 500-800 billion USD:

• Market Reaction: Short-term sentiment drives a rise of 10%-20%, then returns to fundamentals.

• BTC Trend: Maintaining a fluctuation in the range of 90,000 to 110,000 USD, waiting for the halving cycle and ETF capital inflow.

• Altcoins: Most will drop below the current support level and enter deep adjustment.

Scenario Three: Policy Triggers Hyperinflation (Probability 10%)

20 trillion forcibly implemented via MMT (Modern Monetary Theory):

• BTC Bull Market: Prices may surge to $300,000, but the fiat currency system faces collapse risks.

• Systemic crisis: bank runs, supply chain disruptions, social unrest, Crypto Assets losing their pricing anchor

• Conclusion: The world enters a currency system anchored by commodities (gold, oil), and BTC degrades to a niche speculative asset.

IV. Investment Strategy: Maintain Micro Discipline within the Grand Narrative

Warning of Misunderstandings

• Don't buy the "story", buy the "signal": Trump's 20 trillion is narrative, not a tradable signal. What truly drives prices are capital flows, on-chain data, and technical indicators.

• Avoid FOMO-style positions: From March to May 2020, BTC consolidated at $3,800-$5,000 for 78 days before starting the main upward wave. If the policy is implemented, there will be enough time to enter on the right side.

• Leverage is a suicide tool: With such an uncertain macro narrative, any leverage above 3 times is playing with fire. 10 times leverage can liquidate with a ±3% fluctuation.

graded response

• Aggressive: Retain 20% cash, wait for the policy bill to enter the congressional voting process (clear signal), then gradually build positions at BTC 92,000 USD and ETH 3,200 USD.

• Conservative: Maintain 50% cash and avoid chasing highs. If CPI data confirms that inflation is out of control, consider allocating BTC as a hedge.

• Conservative: Completely out of the market, focusing on the progress of policy implementation. The 20 trillion plan will take at least 6 months to go from slogan to legislation, during which there will be multiple "false breakthroughs" for market correction.

5. Comparison of 2020: Similar but Not the Same

From March 2020 to November 2021, BTC rose from $3,800 to $69,000, backed by $6.2 trillion in stimulus (with approximately $1.7 trillion actually flowing into the Crypto Assets market). However, there are fundamental differences in the current environment:

Dimension 2020 2025

Federal Reserve Interest Rate 0%-0.25% 4.0%-4.25%

Inflation Level 1.2% 3.2%

BTC Market Cap 150 billion USD 2 trillion USD

Institution Participation Retail Dominance Institution Share Exceeds 55%

Conclusion: The current market value of BTC has expanded 13 times, with reduced volatility driven by institutions. The increase in value driven by funds of the same scale will be much smaller than in 2020. Expecting a 10-fold market movement from 20 trillion is unrealistic.

6. Rational Perspective: Political Noise and Market Essence

Trump's $20 trillion plan, whether motivated by campaign hype or real policy ideas, is unlikely to change the trajectory of the Crypto Assets market in the short term. The real driving force of the market remains:

1. Micro level: Spot ETF capital inflows, on-chain active address count, exchange liquidity

2. Mesoscopic level: halving cycle, Layer 2 expansion progress, RWA asset on-chain scale

3. Macroeconomic Level: Trends in Real Interest Rates, U.S. Dollar Index, Global Recession Risks

The cognitive framework that investors should establish:

• Treat 20 trillion as "out-of-the-money options": low probability (<10%), but high potential returns. It can be seen as a buying reason for tail risk hedging, rather than a basis for heavy positions.

• Focus on "policy with voting rights": The "Digital Asset Regulatory Bill" under consideration by Congress and the SEC's attitude towards the approval of spot ETFs have more trading value than presidential slogans.

• Maintain discipline in chaos: If the market rises due to this news, gradually reduce positions above $99,000; if it falls, accumulate positions in batches below $92,000.

Final advice: Stay calm and observe the signals, manage risks before the $20 trillion transforms from political slogans into executable legislation. The wealth code of the crypto market is always hidden in the changes of on-chain data and the Federal Reserve's balance sheet, rather than in grandiose statements on Twitter. The real opportunity arises when the implementation of policies, controllable inflation, and liquidity release resonate together—this may be in Q2 of 2026. Before that, surviving is essential to see the dawn of the next cycle. #Gate10月透明度报告出炉 #CoinDesk10月Gate战绩来袭 #美国结束政府停摆 .