Incoming US President Joe Biden’s fiscal stimulus plan could send Bitcoin’s price exploding upwards
The incoming Biden administration’s plan to flood the US economy with trillions of dollars could trigger the next uptick in Bitcoin’s (BTC) bull market as more investors seek refuge from the US dollar.
Axios, an Arlington-based news outlet, reported on Thursday that Joe Biden has asked Congress to distribute $2,000 subsidy payments to US citizens to help counter the economic devastation caused by the COVID-19 pandemic. In addition, the incoming president has proposed a $3 trillion tax and infrastructure package as part of his „Build Back Better.“
Biden reiterated his call for direct assistance to citizens following Friday’s disappointing jobs report, which revealed the loss of 140,000 jobs in December:
„Economic research confirms that in conditions like today’s crisis, especially The News Spy with interest rates so low, immediate action – even with deficit financing – will help the economy.“
Taking 2020 as a benchmark, the new wave of stimulus could be another catalyst for Bitcoin, with new funds coming into the market reflected in asset prices.
Donald Trump, a Republican, has also resorted to economic stimulus. Under his leadership, the US passed a historic $2 trillion stimulus package in March. In addition, Trump signed a $900 billion measure last month, paving the way for $600 subsidy checks.
The federal government’s inflationary policies coincide with record-breaking interventions by the Federal Reserve, which has deployed trillions of dollars in 2020 to counter a liquidity crisis and keep interest rates under control.
In 2020, the Federal Reserve’s balance sheet exploded.
Although these measures have provided strong support for risk assets, a category that in the past included Bitcoin, emerging theory on BTC sees cryptocurrency playing the role of inflation hedge.
This phenomenon is not only confirmed by Bitcoin’s historical performance over the past 11 years, but also by the new wave of institutional money that is entering the market. Institutions are buying Bitcoin with a clear objective, and may one day become the „mega HODLers“ of the industry.
The narrative of Bitcoin as digital gold has been one of the main catalysts behind institutions‘ approach to the crypto asset. It has helped sustain Bitcoin’s 300% rally in 2020, doubling its price in the last three weeks. In 2021, this trend could intensify as the purchasing power of the dollar continues to erode.
Even JPMorgan Chase has acknowledged that Bitcoin is stealing some of the market share of gold, the traditional safe haven asset. On Friday, one Bitcoin was worth more than 22 ounces of gold, a new all-time high.