What happened
Bitcoin’s price reached a new historic record above $ 37,000 on Wednesday, after Democrats won two Senate seats in Georgia’s run-off elections. Actions of MicroStrategy (NASDAQ: MSTR) and Grayscale Bitcoin Trust (OTC: GBTC) it also rose sharply, closing the session up 12.1% and 11.5%, respectively.
And
Georgia’s elections effectively gave Democrats control of the Senate. Combined with their majority in the House of Representatives, Democrats and President-elect Joe Biden now have a greater ability to implement stimulus measures.
Bitcoin, MicroStrategy and Grayscale Bitcoin Trust reached new records on Wednesday. Image source: Getty Images.
While this stimulus can help the economy recover and ease the financial burden for many Americans, it is also likely to have a cost. To pay for the stimulus program, the US government will likely need to print more money. This, in turn, could lead to inflation and a decline in the value of the dollar.
What now
Many people are turning to bitcoin to protect their wealth from such a situation. Due to its limited supply – a maximum of just under 21 million bitcoins will be created – some investors believe that the value of the cryptocurrency will increase as fiat currencies such as the dollar decrease in value when its supply increases.
MicroStrategy CEO Michael Saylor is one of those investors. In August, MicroStrategy started using bitcoin as its main treasury reserve asset. Since then, the business intelligence company has purchased 70,470 bitcoins, which are now valued at more than $ 2.6 billion. Your stock now tends to keep up with bitcoin price movements. It increased strongly along with cryptocurrency today.
The grayscale Bitcoin Trust tracks bitcoin price movements even more closely. The trust holds approximately 0.001 bitcoin for each of its shares. The price of its shares, when multiplied by 1,000, should theoretically approach the price of a bitcoin, although the grayscale Bitcoin Trust tends to trade with a high premium for its underlying cryptocurrency holdings.