The cryptocurrency market lit up on Sunday, with social media erupting in cheers as users anticipated new bull runs on bitcoin. and tokens like XRP and DOGE boosted by stimulus checks, following President Donald Trump’s announcement of a tariff dividend for low-income Americans on Truth Social.
But the reality, as Treasury Secretary Scott Bessent later made clear, is more complicated.
Bessent explained that the President’s tariff dividend could be obtained through tax cuts from his major economic policy bill earlier this year.
“The $2,000 dividend could come in many forms, many ways. It could just be the tax cuts that we’re seeing on the president’s agenda: no tip tax, no overtime tax, no Social Security tax, with deductibility on auto loans,” Bessent told ABC’s This Week when asked about a Trump social media post.
These indirect measures, as Bessent mentions, may not trigger the same immediate surge in bitcoins, altcoins, or consumer spending as direct stimulus checks typically do. That’s because checks provide quick, tangible cash inflows that can quickly boost demand, while tax cuts tend to distribute benefits more gradually.
It is the case that a bird in the hand is worth two in the bush: the certainty of a direct influx of cash generally has a more immediate market impact than the uncertain promise of indirect measures.
Bessent’s clarification came following the euphoric assumption that the announced dividend would come in the form of stimulus checks, drawing parallels with COVID-era payments that were closely linked to unprecedented rallies in cryptocurrencies, particularly altcoins.
The narrative raised market valuations. bitcoin rose from about $103,000 to $105,000 on Sunday, extending gains to more than $106,500 at one point during Asian hours on Monday.
The leading cryptocurrency has gained 4% in the last 24 hours, and altcoins such as XRP, WLFI, PUMP, UNI, and ZEC have risen between 8% and 25%, respectively. The CoinDesk 20 index has gained more than 5% to 3,469 points. The demonstration, however, stalled around 8:00 am UTC.
It’s also worth noting that drawing parallels with 2021 doesn’t quite hold up. At the time, inflation was well below the Federal Reserve’s 2% target and interest rates were pegged near zero, both factors that encouraged greater risk-taking and market exuberance. Today, rates are around 4% after recent cuts, and inflation remains at least one percentage point above the Federal Reserve’s target.
This raises a crucial question: whether recipients of the tariff dividend (whether through direct payments or indirect measures like tax cuts) will channel those funds into cryptocurrency trading or opt to bail them out.
