Bitcoin Finance

Big for Bitcoin: U.S. Senate Passes $500b Coronavirus Stimulus Package

On April 21st, the U.S. Senate approved a supplemental stimulus package of $484 billion, which will be primarily allocated to hospitals, disease testing, and small businesses.
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$2 trillion of fiscal stimulus, which included $1,200 cheques for a majority of American taxpayers, and historic $4 trillion in monetary stimulus purportedly isn’t enough for the United States.

On April 21st, the U.S. Senate approved a supplemental stimulus package of $484 billion, which will be primarily allocated to hospitals, disease testing, and small businesses.

The small business loans included in the original $2 trillion had begun to run out while hospitals have gone into overdrive, presumably resulting in this latest bill.

While it is not yet law, like with the previous package, it’s expected to be supported by all sides of the Hill.

This latest stimulus comes as the coronavirus outbreak has continued to ravage the economy, resulting in over 20 million unemployment claims in a month and falling economic output across the board, best exemplified by the negative oil prices seen on April 20th.

While this latest package is a stimulus that is needed to keep the gears of the American economy turning, it only cements Bitcoin’s value as a form of scarce and decentralized money amid these times of grave crisis.

Could Bitcoin Benefit?

There’s no one doubting the efficacy of the bill; almost everyone agrees that while an inflationary act, the money being printed is needed to save many portions of the economy from going bankrupt, which will result in societal discourse.

But, Bitcoin bulls say these stimulus bills have an added benefit of boosting the fundamental value of the cryptocurrency.

The baseline consensus amongst executives of and leading investors in the crypto space is that Bitcoin’s value is being proven by the debasement of fiat money around the world, enabled by efforts to stimulate the economy, be it through central bank asset purchases or these checks. Dan Morehead of Pantera Capital said on the matter:

“As governments increase the quantity of paper money, it takes more pieces of paper money to buy things that have fixed quantities, like stocks and real estate, above where they would settle absent an increase in the amount of money. The corollary is they’ll also inflate the price of other things, like gold, bitcoin, and other cryptocurrencies.”

Mike Novogratz — the CEO of Galaxy Digital and one of Morehead’s contemporaries — echoed this line, telling Bloomberg that the “monetization of debt” and the increasingly dramatic actions central banks are taking are making “hard assets look better.”

Hard assets look so good, he explained, that he still expects Bitcoin to hit $20,000 — 185% above the current price of $7,000 — by the end of 2020. 

Furthering Novogratz’s point, in 30 days the Bitcoin block reward halving will transpire, dropping the inflation rate of the cryptocurrency from around 3.8% to 1.9%. The fact that the halving comes as the world’s central banks have begun debasing their currencies is perfect, Novogratz explained.

In some ways, Bitcoin also benefits from the stimulus directly.

Remember the $1,200 cheques mentioned earlier in this article?

Well, according to Brian Armstrong, CEO of leading crypto exchange Coinbase, his company processed exponentially more $1,200 purchases of cryptocurrency on the day the cheques were sent than it does normally.

The percentage of buys or deposits that are exactly $1,200 grew from an average of ~0.08% to 0.375% on that day.

But unfortunately for bulls, Bitcoin’s price wasn’t catapulted into a rally from the stimulus cheques alone.



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Since 2013, Nick has shown interest in Bitcoin and cryptocurrencies. He has since become involved in the industry as a full-time content creator, working for NewsBTC, Bitcoinist, LongHash, among other outlets. Aside from covering the news, Nick is a Creative at Taiwanese technology company HTC. Contact NickC@blockonomi.com

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