The upcoming Biden administration’s plan to flood the US economy with trillions of dollars could be the Bitcoin’s next leg.BTCbull market as more investors turn to a crumbling US dollar.
Axios, a news outlet in Arlington, reported On Thursday, Joe Biden asked Congress to give Americans $ 2,000 in stimulus payments to offset the economic devastation of Covid-19. The president-to-be has also proposed a $ 3 trillion tax and infrastructure package as part of his “Build Back Better” program.
“Economic research confirms that with circumstances like the current crisis, especially with such low interest rates, taking immediate action – even with deficit financing – will help the economy”
If 2020 is anything to go by, the new tidal wave of stimulus measures could be another catalyst for Bitcoin as more money floods the market and makes its way into asset prices.
Even Donald Trump, a Republican, was no stranger to stimulation. Under his leadership the United States successful a historic stimulus bill of $ 2 trillion in March. Trump too signed a $ 900 billion aid package last month that would smooth the wave for $ 600 stimulus checks.
The federal government’s inflation-enhancing policies coincided with a record Federal Reserve intervention, that deployed trillions of dollars in 2020 to combat a liquidity crisis and keep overnight rates under control.
While this policy provided a strong backstop for assets at risk – a category that historically included Bitcoin – the emerging story around BTC is that it is a hedge against inflation.
This is confirmed not only by Bitcoin’s historic outperformance over the last 11 years, but also by the new wave of institutional money entering the market. Institutions are buying Bitcoin with a clear purpose, and maybe one day become the “mega HODLers” of the industry.
Bitcoin’s digital gold story has been one of the biggest catalysts behind the institutional shift to BTC. This story helped Bitcoin’s 300% rally in 2020 and its more than doubling the price in the past three weeks. This trend could increase in 2021 as the dollar’s purchasing power continues to decline.
Even JPMorgan Chase has acknowledged that Bitcoin takes market share from gold, the traditional asset. On Friday, one bitcoin was worth more than 22 ounces of gold, which represents a new record ever.