Key highlights:
- Joe Biden is considering a new stimulus package for Americans
- When the Federal Reserve and the government print more money, people seek havens against inflation
- Printing more money will weaken the dollar, and could very lead to more adoption for Bitcoin
Now that both the United States Senate and the House of Representatives are in control of the Democratic Party, Democrats will find it a lot easier to implement their economic and monetary policies.
A Democrat-led economic policy is likely to lead to additional stimulus packages. Reports say that Joe Biden is speculating about a stimulus package in the form of $2,000 checks.
The new stimulus and printing of more money will attract people to assets like Bitcoin. Bitcoin started a bull-run after March 2020, and one of the underlying factors that helped provide fuel to the Bitcoin rocket was the accelerated money printing by the US government. When there is more liquidity in the market, Bitcoin’s ascending movement is likely to accelerate.
The constant money printing will increase the inflation rate, and both individuals and institutions will be looking for safe havens against inflations in order to protect their purchasing power.
Bitcoin price increased from $10,000 to more than $40,000 in around 4 months. Institutional investors like MicroStrategy entered the BTC market, getting rid of their USD reserves to protect themselves against inflation.
Biden’s measures in the future might accelerate the BTC surge, allowing the Bitcoin price to touch new peaks. The interest rate in the United States is barely above 0% right now, and it is another factor that forces people to take out their money from the bank accounts.
Experts expect unprecedented inflation in the coming years
The United States government printed $3 trillion in 2020. The influx of this massive amount of money has serious consequences, and it will inevitably lead to an increase in the inflation rate. Quantitative easing policies will make scarce assets like Bitcoin more attractive. We already saw many institutions joining the BTC market in 2020, creating an unprecedented capital inflow to the Bitcoin market.
The bond market can predict future inflation, and the recent increase in the rate of bonds that is the all-time high in the past two years shows a more massive inflation rate in the long term.
The current money printing activities have weakened the dollar, and a tsunami of inflation is on the way. The weakening process is likely to continue due to the new stimulus packages.
Bitcoin reacted well to the measures of the US government after the pandemic. Bitcoin has touched new all-time highs recently, and traders expect more growth in the long-term. We might see corrections on the way, but many indicators suggest that the BTC rally is poised to continue.
