The Democrats have proposed another $3 trillion worth of government stimulus in the US. Combined with Jerome Powell’s gloomy comments about the economic future, this could well be the final push Bitcoin needs to get over the $10,000 mark
The Chairman of the Federal Reserve, Jerome Powell, gave a gloomy speech about the future of the US economy yesterday. His speech came just a day after Democrats from the House of Representatives put forward a bill proposing a further $3 trillion in stimulus for the US economy. Bitcoin’s price jumped as a result, but whether this will help Bitcoin break free through the upper resistance of $10,000 is yet to be seen.
Powell said in his speech that the US is faced with an ‘extended period’ of limited growth as a result of the coronavirus outbreak and the damage it has wrought on the economy. He went on to say that the road to recovery was ‘highly uncertain’ but that extra stimulus packages would be ‘worth it.’ No doubt referring to the Democratic Bill put forward to the House of Representatives a day before, which looks to pump another $3trillion in stimulus into the US economy.
The more money the US government prints, the higher the rate of inflation will become for the USD. It is pertinent to remember that the after-effects of the first stimulus package are still not being felt in the US. Because of the stay-at-home measures, there has been reduced spending throughout the US. As soon as these restrictions are relaxed, the effects of inflation will begin to be felt as vendors will have to raise the price of their goods.
Bitcoin with its finite coin cap offers a potentially safe haven from the ravages of inflation. Especially now, just after the halving, as the number of new Bitcoin’s being added into the system has been reduced by 50%. As such, Bitcoin could benefit greatly throughout the remainder of this year, as well as through to 2021 due to high rates of inflation in the US.
Beyond looking to merely conserve the value of their money, Powell’s gloomy message about restricted growth will drive people to invest in Bitcoin who are looking to go one step further and grow their money.
Bitcoin has been the best performing asset of 2020 so far and it has the potential, as discussed above, for its price to rise dramatically this year. Powell’s comments about an ‘extended period’ of limited growth, one could deduce, might drive people towards investing in the market’s best-performing asset.
It is impossible to say it will do this for certain. However, the signs do look promising. If not in the next few weeks, then it could do before the year is over. As the economic situation worsens, more and more people may turn to cryptocurrency in greater numbers.
Once the barrier of the $10,000 gets broken, it will be intriguing to see where the price might go.