Prediction: This Investment Could Be the Biggest Winner From President Trump's "Big, Beautiful Bill"

After several weeks of deliberation on Capitol Hill, President Donald Trump took a victory lap on July 4 after he signed the "big, beautiful bill" into law

For now, it's difficult to determine which sectors or specific companies will be most vulnerable or stand to benefit from the new policies set to take effect under the law

Let's explore some of the major themes covered in the megabill, as well as some of the economic headwinds that could emerge now that this legislation has passed

Analyzing the "big beautiful bill" At its core, the "big, beautiful bill" revolves around major changes to tax and spending policies

Lower taxes results in less revenue for the federal government

Regarding spending, the bill includes visions to reduce certain areas under Medicaid as well as some Supplemental Nutrition Assistance gram (SNAP) benefits

Image source: Getty Images

There could be an unwanted consequence of the bill

Large-scale tax cuts could spur demand from consumers and es

In theory, this increased economic activity could result in higher prices for goods and services

Although history by no means serves as a guarantee for what's to come, the dynamics illustrated in the chart below suggest inflation could be an unwanted consequence of the legislation

US Government Surplus or Deficit data by YCharts Per the graph above, the U

This isn't a coincidence because this period unusually high government spending in the form of COVID stimulus packages

To be, deficits alone don't inherently cause inflation

As the chart shows, the U

The more nuanced point here is that deficits can help contribute to inflation, especially during demand surges -- which could very well occur under the new policies put in place

Moreover, longed deficits -- which the CBO expects under the "big, beautiful bill" -- do not always inspire inflationary environments immediately, but they can act as a risky setup

With this in mind, the mere perception that an inflationary storm is on the horizon could lead to an interest in alternative assets

This is where Bitcoin enters the picture

And Bitcoin could be your best hedge The chart below indexes the price of Bitcoin against U

Inflation rates during the past 10 years

Bitcoin Price data by YCharts There are a couple of important takeaways from the trends above

This could mean that investors were anticipating inflation anchored by enormous government stimulus

I think the main factor behind Bitcoin's precipitous drop during that period is tied to aggressive interest rate hikes by the Federal Reserve -- essentially reducing liquidity flowing through the in an effort to tame inflation

During the past couple of years, Bitcoin has rebounded in spectacular fashion, and it now hovers near all-time highs

To me, the trends explored in the graph above imply that Bitcoin performs best when inflation fears are present but the economic picture also features robust liquidity

In essence, Bitcoin can act as a hedge against inflation, but it is also important to note that the cryptocurrency is sensitive to changes in monetary policy

If the government continues spending -- essentially fueling the economy with mounting debt -- while the Fed holds off on raising interest rates, Bitcoin could become much more than a hedge

In Bitcoin could be seen as a high-conviction view that current policies could bring the current system to a point

In a scenario this, Bitcoin's upside could be explosive

While the downside will ly be intense volatility (pictured above), I think that is worthwhile in the short term relative to hoarding cash

For these reasons, I think big, beautiful Bitcoin could emerge as the hidden winner from Trump's new legislation

Adam Spatacco has no position in any of the stocks mentioned

The Motley Fool has positions in and recommends Bitcoin

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