The price of Bitcoin (BTC) peaked at over $ 51,000 on March 7 after the US Senate passed a projected $ 1.9 trillion stimulus bill, nearly twice the market value of BTC.
US President Joe Biden said the Senate approval signals significant progress in familiarizing Americans with the “badly needed” incentives bill. He said:
“Today I can say that we’ve taken another giant step toward fulfilling that promise that help is on the way. It wasn’t always good, but it desperately needed it.”
Why is the incentive optimistic for the bitcoin price?
The passage of the stimulus bill immediately weakens economic conditions in the United States. Last year showed that the impact of such measures is increasing investors’ appetite for risky assets, including stocks and cryptocurrencies.
In April 2020, when the first stimulus bill was passed, it coincided with massive bullish gains in both the US stock market and the cryptocurrency market.
Of course, investors expect the second stimulus package to have a similar effect on the bitcoin price in the short term.
Longtime trader Peter Brandt said the reduction in the purchasing power of the US dollar is only just beginning.
The combination of the dollar’s depreciation and the new stimulus package is likely to improve market sentiment over Bitcoin. Brandt wrote:
The devaluation of the purchasing power of the US dollar, DX_F, has just begun. This is why Bitcoin $ BTC, real estate, stocks, and US commodities continue to rise in terms of paper dollars. ”
Consumer Price Index of all consumers in urban areas. Source: Peter Brandt, Fred
If the US stock market begins to recover from the weekly decline, it could accelerate Bitcoin’s development, given the decline in stocks and cryptocurrencies during the recent correction.
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In addition to Bitcoin’s improved overall environment, the first registered Chinese company called Meitu officially bought Bitcoin and Ethereum for $ 40 million. The company stated:
The group acquired 15,000 Ether and 379.1214267 Bitcoin (BTC), both cryptocurrencies, in open market transactions totaling approximately $ 22.1 million and $ 17.9 million, respectively, on March 5, 2021.
A well-known Chinese journalist named Wu Blockchain commented on March 7, “The first Chinese public company has appeared to buy large quantities of bitcoins.” Photo Retouching Company Meitu announced that it will buy Bitcoin and Ethereum for $ 40 million. Criticism for holding more ICOs in 2017. ” He added:
Meitu said the cryptocurrency has enough room for valuation, and could diversify the risk of getting cash in managing the fund. This could lead to more Chinese companies buying bitcoins to raise stock prices, but it could also be banned by the Chinese government. ”
If a new trend emerges, as public companies in Asia start buying bitcoin, it could lead to an influx of new capital into the bitcoin exchange.
While it is unlikely that many of the companies listed in China will announce the purchase of bitcoins due to the regulatory uncertainty, countries such as Japan and South Korea may see a similar trend in the coming months.