Washington is gridlocked over a second round of stimulus and they are on recess until September...

What once looked like a sure thing now looks like a long shot.

After House Democrats came up with a $3 trillion dollar stimulus package months ago, Senate Republicans finally introduced their own stimulus package at the end of July.

Unfortunately this bill was ONLY worth $1 trillion while the house democrat bill was north of $3 trillion.

Most thought, myself included, that they would be able to meet in the middle over the coming days and weeks and hash out a stimulus plan that many Americans are badly in need of.

However, they did not.

One thing that both sides seemed to be in agreement of was the idea of another round of stimulus checks for many Americans, most likely the same number of received the first round of checks.

While these checks are badly needed for some, they represented some disposable income for others, especially when combined with the $600 in federal unemployment that many were receiving.

Due to these stimulus measures, consumer spending and personal income actually rose during the second quarter while overall GDP shrank by over 30%:

(Source: https://money.yahoo.com/coronavirus-stimulus-loss-of-extra-600-unemployment-benefits-leads-to-44-drop-in-spending-192200590.html)

The end result was that much of this money found its way into bitcoin and crypto, which was no surprised considering that it had already been performing well and many people have been stuck at home with not much to do.

This was also a major reason that the dollar had been so weak over the last several months.

However, as things stand no, there is still no deal in place and the house and senate are on break until September. Something that isn't good news for those hoping for another round of stimulus in the immediate future.

Will crypto be able to stand on its own two legs without another round of stimulus?

I am honestly not sure.

At some point it will be able to for sure, but much of the recent price action had been due to the weakening dollar and expectation of more stimulus.

If that doesn't come I can't image that the price action will be bullish in the near term.

Bitcoin is up over 3x since the March lows and many altcoins are up multiples of that, especially small cap defi coins.

And coins that rhyme with "shrink" (LINK).

Like I said, in the medium term, things will be just fine for bitcoin and crypto, but without a fresh round of stimulus I am not quit as bullish in the near term.

The unknown here is whether the house and senate will come together at an unexpected moment and drop a bomb on the markets of a stimulus agreement.

In fact, judging by the stock markets continued upward climb, I'd say that most people are betting on that happening.

However, with each day that goes by and people now without that extra $600 unemployment cushion, as well as a second stimulus check, and no formal moratorium on evictions and foreclosures we are getting closer and closer to Americans feeling some significant financial pain which will undoubtedly be felt in financial markets as well, probably including crypto.

So, here's to hoping both sides can pull their heads out of their arses and get something agreed upon before we see another market crash while Washington continues to play politics.

Stay informed my friends.

-Doc