The world’s largest economy, the United States of America, is on pace to pass President Joe Biden’s $1.9 trillion COVID-19 stimulus package. A bill that the U.S. Senate narrowly passed a few days ago. Today, the bill was passed by the Democrat-controlled House. Now it is expected to be signed into law by the President before the deadline of federal unemployment benefits on March 14, 2021.
To the lawmakers and leaders in Washington, a new dawn is about to be ushered in with plans to use the $1,400 stimulus checks for each eligible Americans to alleviate poverty as much as possible. However, the biggest beneficiaries maybe those with a positive inclination towards safe-haven assets, of which Bitcoin and cryptocurrencies are gradually becoming the most attractive.
While the nation awaits the humongous bill by Congress, expectations are mounting across the board as to the potential immediate impact of the new funds that will be injected into the economy. Although the stimulus package will address key issues including infrastructure, COVID-19 distribution, and unemployment concerns, the direct checks that will be issued to the targeted citizens will further aggravate the inflation that has been associated with the US dollar since the beginning of the pandemic.
With the excess US dollar in the economy, inflation is bound to be experienced. This will stir the devaluation of the currency. Moreover, the first sets of stimulus beneficiaries in the year-ago-period reportedly invested their checks into Bitcoin, according to a Coinbase exchange claim, and such occurrence is imminent this time around, seeing that the value of the premier digital currency has soared by almost 609% in the past one year.
American stimulus beneficiaries do not want to get caught up with the devaluation of the palliative they are given, just the same way institutional backers of cryptocurrencies do not want their cash reserve to lose a significant part of its value. However, one of the guaranteed ways to achieve this is by embracing gold or Bitcoin. The decline in the value of gold in the past 12 months in relation to the latter may make it lose the bid for even traditionally conservative investors to embrace it in the view of any potential incoming inflation.
However, the major question is when will the stimulus funds begin to translate into a bullish run in the price of Bitcoin and other cryptocurrencies, a scenario that many crypto analysts believe is inevitable with the stimulus palliative.
Moreover, it should be noted that it is the funds in circulation that can stir the economic inflation, from which digital currencies are expected to benefit. As such, the most realistic impact of the incoming funds will be felt when the checks get delivered to households. However, investors hardly wait for the fallout of a bearish condition before they act, and as such, the current surge in the price of Bitcoin can be attributed to a buy-up by both retail and institutional investors around the world.
At the time of writing, Bitcoin is trading at $56,414.90, up 7% in the past week, according to data from CoinMarketCap.