The main news for the world economy in recent days has been the stimulus package promoted by the Biden administration. Well, it will inject into the US economy, and therefore the global economy, the impressive amount of 1.9 trillion dollars. Something that will not only have an effect on traditional financial markets, but also on the crypto market. Therefore, today we tell you how the US stimulus package will impact Bitcoin.
The stimulus package and the financial market
However, to understand how the stimulus package will impact Bitcoin, we must first understand how it impacts the traditional financial market. And this occurs through two different mechanisms, on the one hand, because the money that is injected through these government packages is received first and foremost through traditional financial channels. In other words, banks end up becoming the main recipients of these funds, through deposits from their clients, and the use of their platform for their distribution.
This of course translates into an increase in the funds available to these institutions. Which can invest them in the financial market, causing the positive effects of government aid to be perceived first on Wall Street than on Main Street. That is to say, earlier in the stock markets than in the real economy sector that the government pretends to help.
For its part, the second mechanism is the use of stimulus checks to invest in the stock market. An option that was already chosen by millions of Americans during the last payment of checks to the population, which were used largely to buy shares in the markets. Something that seems to be happening again according to a study carried out by Deutsche Bank, which indicates that approximately half of young people between 18 and 24 years old will use at least 40% of their checks to buy shares. A trend that also occurs among check recipients between the ages of 34 and 54.
What will happen to Bitcoin?
Understanding this landscape is critical to understanding how the US stimulus package will impact the price of Bitcoin. Well, at a time when small and institutional investors are demanding large amounts of Bitcoin. Increasing the money available for purchase by these investors through this stimulus package will end up translating into an increase in demand and therefore in the price of Bitcoin.
Something that we already saw during the last stimulus package, when it gave a boost to the price of BTC. And that we are already beginning to perceive in the price of the cryptocurrency today. Well, the expectation in the entry of millions of dollars to the Bitcoin market, as a result of the monetary injection caused by this stimulus package, has caused the virtual currency to go from 46,722 dollars to 56,834 dollars in which it is quoted. at the time of writing this article.
This of course has revived the markets’ interest in cryptocurrency. This is added to the increase in the number of companies that have recently invested in Bitcoin as an asset store of value. They allow to foresee that the price of the cryptoactive will remain on the rise, as the expectation and the arrival of stimulus checks feed the demand for BTC.