The entire economic terrain is to a very large extent influenced by political happenings and the cryptocurrency ecosystem is not an exception to this rule. The world is experiencing a transition era in the United States political atmosphere, and the influence of this is constantly being profiled to key economic indices with Bitcoin (BTC) under the focus in this article.
The Shift in Governance and the Impending Stimulus Boost
Since the 2020 U.S. presidential election, Americans had been looking forward to a change in the government. Now, as results showed a lead in favor of Democratic candidate Joe Biden against Republican Donald Trump. Moreover, the United States Congress confirmed the victory of Joe Biden just in the past week, setting all minds to anticipate the new president’s era.
As is common in many democratic climes, there is a wide expectation being placed on the incoming administration especially with rolling more economic and monetary palliatives to further aid Americans as they combat the worsening conditions of the COVID-19 pandemic. The incoming president has also revealed his readiness to rollout trillions of dollars in stimulus checks, according to The Washington Post. This he believes will help bolster what the previous administration has kickstarted including the $900 billion approved by President Donald Trump in December 2020.
“We need to provide more immediate relief for families and businesses now,” Biden said, adding that “The price tag will be high,” as he noted that, “The overwhelming consensus among leading economists left, right and center is that to keep the economy from collapsing this year, getting much, much worse, we should be investing significant amounts of money right now.”
While eradicating COVID-19 in its entirety remains one of the most pressing agenda of the incoming administration, the rollout of more stimulus packages will remarkably occupy the Biden officials in the next couple of weeks.
With More Stimulus Incoming, What Is in It for Bitcoin?
The price rallies being seen in Bitcoin today can be traced back to the very first rollout of stimulus packages by the Trump administration in the second quarter of 2020. With the stimulus which gives each eligible American a $2,000 paycheck with more aids for businesses, more money had to be printed to meet this monetary demand.
From an economic standpoint, the more money printed means there was more money in circulation, which ultimately led to the inflation and devaluation of the US Dollar. Investors and businesses alike thus turned to Bitcoin as an alternative to hedge against the impending inflation caused by the excessive circulation of money.
Should the Biden administration succeed in rolling out a new multi-trillion dollar stimulus package, the entire sequence of events that lead to Bitcoin being widely embraced by institutional investors may repeat itself, further making the already outperforming cryptocurrency even more valuable.
The price of one Bitcoin at the time of writing is $36,544, according to CoinMarketCap.