Bit­coin’s price ‘un­likely’ to rise fol­low­ing 2nd stim­u­lus pay­ments

Could the stim­u­lus pay­ments trig­ger a pos­i­tive rally for Bit­coin?

AMBCrypto Weekly - - Front Page -

On 22 June, the Pres­i­dent of the United States, Don­ald J. Trump, hinted that the sec­ond round of stim­u­lus pay­ments could be on its way as the U.S econ­omy con­tin­ues to re­cover from the pan­demic-in­duced crash.

Af­ter 27 March’s his­toric $2.2 tril­lion stim­u­lus bill, many ex­pected the 2nd stim­u­lus check to have a pos­i­tive im­pact on the price of Bit­coin as well.

OKEx’s Jay Hao be­lieves in this nar­ra­tive, with the CEO sug­gest­ing that im­mi­nent stim­u­lus pay­ments may trig­ger the next Bit­coin price rally.

In a re­cent post, Hao re­vealed that af­ter the 1st stim­u­lus checks came through back in March, Bit­coin surged by close to 58 per­cent.

Since the pay­ments are cash pay­outs to in­di­vid­u­als and small busi­nesses, Hao be­lieves that in­sti­tu­tions and re­tail are go­ing to be sup­port­ing units for Bit­coin’s price drive in the up­com­ing weeks.

Tak­ing the ex­am­ple of Grayscale’s to­tal in­vest­ment in Bit­coin in 2020, Hao high­lighted that the firm’s ac­cu­mu­la­tion di­rectly trans­lated into the rapid rate of in­sti­tu­tional Bit­coin adop­tion. From a re­tail stand­point, he added,

“The Fed­eral Re­serve also shows that banks have more cash than ever be­fore. If more money flows into the mar­ket lead­ing to more money held by re­tail in­vestors un­der the sec­ond stim­u­lus, I think they are likely to use Bit­coin as an al­ter­na­tive in­vest­ment.”

There is no con­crete data on how many peo­ple in­vested their stim­u­lus in Bit­coin, but if a sig­nif­i­cant amount of peo­ple did, Bit­coin’s mar­ket cap would have dras­ti­cally im­proved. 10 per­cent of the stim­u­lus would have pushed the mar­ket cap of Bit­coin up­wards of $300 bil­lion.

Since such a sce­nario did not pan out back then, it is un­likely to un­fold with the up­com­ing stim­u­lus ei­ther.

In fact, a ma­jor­ity of the peo­ple would rather keep their cap­i­tal stim­u­lus liq­uid, than in­vest­ing in high-risk as­sets such as Bit­coin.

Fur­ther­more, with tra­di­tional mar­kets now sta­bi­liz­ing, peo­ple will be more in­clined to in­vest in in­vest­ment ve­hi­cles that have a low-risk out­put.

There­fore, it is highly un­likely that the stim­u­lus pay­ments will drive Bit­coin’s price at the mo­ment, con­sid­er­ing the fact that the crypto-as­set’s move­ments haven’t been in­dica­tive of a bullish trend since the start of June.

Are these as­sump­tions cor­rect with re­spect to Bit­coin? Back in March, when Brian Arm­strong, Coin­base CEO, had re­ported that de­posits worth $1200 (stim­u­lus check value) for Bit­coin had ex­ploded in the mar­ket fol­low­ing the stim­u­lus, many bought into the nar­ra­tive that Amer­i­cans were buy­ing into Bit­coin via their stim­u­lus money.

It is im­por­tant to un­der­stand that dur­ing the 1st stim­u­lus, the en­tire eco­nomic land­scape was in grave peril, while nurs­ing the pos­si­bil­ity of a re­ces­sion. Although Bit­coin’s mar­ket cap picked it­self up be­fore the stock mar­ket did, it was not due to the stim­u­lus.

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