Over the weekend the US Senate passed President Joe Biden’s nearly $2T stimulus package. The stimulus will help the US economy to recover after Covid-19. These stimulus checks are one of the biggest government interventions since the World War 2. The amount didn’t hit $2.2T which was approved in March 2020 but is more than the $787B support package issued in 2008 after the Financial crisis.
But what does this actually mean for Bitcoin?
“We believe there is a good chance that at least some of this money will find its way to the flagship cryptocurrency—or perhaps even other altcoins.”- said Jason Deane, Bitcoin analyst at Quantum Economics.
One of the main reasons for the price to grow even higher than now is that Bitcoin is accepted as a hedge against inflation. The decline in value of the US Dollar has been good for Bitcoin. The claims that “Bitcoin is the digital gold” continue to grow. During the last months many institutions allocate their cash positions to crypto, mainly Bitcoin.
After the stimulus pack was approved by the US Senate the price crossed $50 000 and now is $55 527.
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Despite expectations, it’s not sure that the price of Bitcoin is correlated to the US stimulus. The macro factors that influence the demand curve are still not clear.
According to Ingo Fiedler, co-founder of the Blockchain Research Lab, the short term increase in the price of BTC can be influenced by the stimulus but in long term Bitcoin is gaining popularity since the beginning of Covid-19 and the trend will continue to accelerate.
“With more USD entering the market, asset prices are likely to increase further,” Fiedler told Decrypt. “This affects all kinds of assets from real estate, securities, art, and also cryptocurrencies. It is effectively a devaluation of the USD against all these assets.” – said Fiedler.