The next Biden government’s plan to flood the United States economy with trillions of dollars could start the next stage of the bullish Bitcoin (BTC) market, as more investors seek refuge in a falling US dollar.
Axios, an Arlington-based news agency, reported on Thursday that Joe Biden asked Congress to provide Americans with $ 2,000 in stimulus payments to help offset Covid-19’s economic devastation. The new president also proposed a $ 3 trillion infrastructure and tax package as part of his “Build Better” program.
Biden doubled in his call for more direct relief for Americans after Friday’s disappointing job report, showing a loss of 140,000 positions in December.
He said:
“Economic research confirms that in conditions like today’s crisis, especially with such low interest rates, immediate action – even with the financing of the deficit – will help the economy”
If 2020 is anything to do, the new wave of stimulus could be another catalyst for Bitcoin, as more money floods the market and reaches asset prices.
Even Donald Trump, a Republican, knew the stimulus well. Under his leadership, the United States approved a $ 2 trillion historic stimulus project in March. Trump also signed a $ 900 billion aid package last month that would open the wave for $ 600 stimulus checks.
The federal government’s rising inflation policies coincided with a record intervention by the Federal Reserve, which employed trillions of dollars in 2020 to combat a liquidity crisis and keep overnight rates under control.
While these policies provide strong support for risky assets – a category that has included Bitcoin in the past – the emerging narrative around BTC is that it is a hedge against inflation.
This is not only corroborated by Bitcoin’s history of superior performance over the past 11 years, but also by the new wave of institutional money entering the market. Institutions are buying Bitcoin for a clear purpose and may one day become the industry’s “mega HODLers”.
The digital narrative of Bitcoin gold has been one of the biggest catalysts behind the institutional shift towards BTC. This narrative helped fuel Bitcoin’s 300% rise in 2020 and its price has more than doubled in the past three weeks. This trend may intensify in 2021, as the dollar’s purchasing power continues to decline.
Even JPMorgan Chase acknowledged that Bitcoin is gaining market share in gold, the traditional safe-haven asset. On Friday, a Bitcoin was worth more than 22 ounces of gold, which represents a new historic record.
