Bitcoin investors have received another bullish update that the Biden administration is considering for a new $3 trillion stimulus package, following the $1.9 trillion pandemic-relief bill signed earlier this month. Reportedly, the proposal will be sent to President Joe Biden by this week. The cash injections, along with the ongoing money printing from the Federal Reserve are expected to increase inflation that is eventually going to profit hedge assets like Bitcoin.
The supposed $3 trillion proposal reportedly would likely be divided up into two proposals. The first proposal is aimed at improving infrastructure, including a $400 billion investment to fight climate change. With another $200 billion for housing infrastructure, $100 billion for low-income homes, and $60 billion for green transit networks.
The second proposal will focus on the labor force, pay for free community college, pre-kindergarten education, and paid leave.
Given the money printing eventually resulting in the fall of the dollar value leading to extreme inflation. Bitcoin could emerge as a hedge against inflation looking to protect against the falling dollar.
For instance, since the passage of the $2.2 trillion CARES Act in March 2020, Bitcoin has been up by 788%. The price surge has come since December, the same month the $900 billion package was passed.
The decline in value of the US dollar will be good for Bitcoin as the asset can't be devalued by a government printing more money out of it.
Usually, the U.S central bank maintains benchmark lending rates near zero and wants to keep them intact until 2024. In the case of Bitcoin, the cryptocurrency performs well in a low rate economy as it only pushes down the dollar value downwards, while raising its value.
For instance, the U.S. dollar index has declined by more than 12% from its March 2020 top following the launch of a lower interest rate policy. Within the same time frame, Bitcoin’s rate against the dollar has surged by more than 1,500%.