The incoming Biden administration plans to flood the U.S. economy with trillions of dollars, which may ignite the next branch of the Bitcoin (BTC) bull market as more and more investors seek safe-haven dollars.
Arlington-based news outlet Axios reported on Thursday that Joe Biden has asked Congress to provide Americans with a stimulus payment of $2,000 to help offset the economic losses caused by Covid-19. The incoming president also proposed a $3 trillion tax and infrastructure package as part of his “rebuild better” plan.
After Friday’s disappointing employment report showed a loss of 140,000 jobs in December, Biden’s call for more direct relief for Americans doubled.
“Economic research confirms that in today̵7;s crisis and the like, especially under such low interest rates, taking immediate action, even if there is deficit financing, will help the economy.”
If 2020 is to pass, as more funds pour into the market and enter asset prices, the new wave of stimulus may become another catalyst for Bitcoin.
Even Republican Donald Trump is no stranger to excitement. Under his leadership, the United States passed a historic $2 trillion stimulus plan in March. Trump also signed a $900 billion rescue plan last month, which will pave the way for a $600 stimulus check.
The federal government’s policy of increasing inflation coincides with the Federal Reserve’s record intervention measures. The Fed deployed trillions of dollars in 2020 to respond to the liquidity crisis and control overnight interest rates.
Although these policies provide strong support for risky assets (including Bitcoin in the past), the emerging narrative surrounding BTC is that it is a hedge against inflation.
This is not only confirmed by the outstanding performance of Bitcoin in the past 11 years, but also by a new wave of institutional funds entering the market. Institutions are buying Bitcoin with a clear purpose and may one day become the “mega HODLers” of the industry.
Bitcoin’s digital gold narrative has been one of the biggest driving forces for the transition to the BTC system. This narrative helped propel Bitcoin’s 300% rise in 2020, and the price has more than doubled in the past three weeks. As the purchasing power of the dollar continues to decline, this trend may intensify in 2021.
Even JPMorgan Chase has admitted that Bitcoin is taking market share from the traditional safe haven asset gold. Last Friday, the value of one bitcoin was more than 22 ounces of gold, which was a record high.