Stimulus package is pushing bitcoin price up

Overview

• Type: bitcoin, coronavirus, covid19, stimulus

President Trump measures are impacting the value of Bitcoin

It’s a common theme heard these days from bitcoin advocates: The U.S. dollar and other currencies will eventually be devalued by the injections of trillions of dollars of coronavirus-related aid and monetary stimulus by governments and central banks. That should, in good theory, strengthen the case for bitcoin, the oldest and largest cryptocurrency, as a hedge against inflation. 

Any inflation stemming from fiscal and monetary stimulus could take a while to appear – partly because of higher unemployment and a drop-off in economic demand could alleviate upward pressure on consumer prices in the near term. In the U.S. alone, roughly 10 million new unemployment claims were filed during the last two full weeks of March, and JPMorgan economists predict that a report this week will reveal another seven million claims were filed last week. Bank of America says the lack of an effective policy response to control the spread of the virus will push 2020 global growth to a contraction of 2.7 percent, instead of an expansion of 0.3 percent. 

Nic Carter, a partner at Castle Island Ventures and co-founder of the blockchain analytics startup CoinMetrics, wrote last week that ” the devaluation of money  does not happen immediately but over time.”  

The 2008 financial crisis prompted the Federal Reserve to double total assets in a matter of weeks, and then doubled the size of the balance sheet again to more than $4 trillion over the next few years. But it took the money supply, as measured by M2, more than 12 years to double, at least partly because of low demand for loans in the years after the crisis. 

Kraken, a San Francisco-based cryptocurrency exchange, noted in an April 4

Stimulus Package pushing BTC price up

that the volume of PAXG trading on its platform surged to $13 million in March, a six-fold increase from February levels. 

“Kraken clients appear to see PAXG as a haven of late since it is backed by gold, which typically acts as a safe haven amidst economic uncertainty,” according to the post. 

Only time will tell, but so far we see that Bitcoin is acting very similar to Gold and even some advocates believe that as a long term investment is an even better option.