President Donald Trump has signed the $900 billion stimulus package recently approved by the U.S. Senate. The pandemic relief package includes direct payments of $600 to individuals, half the amount sent in the first package. Just like the first, this latest package will highlight the strength of Bitcoin (BTC) over fiat currency.
A Package of Necessity
For the first half of 2020, the world economy was devastated by the Covid-19 pandemic. Currently, more countries have reopened their economies, at least partially. However, new waves of infections in the U.S. prompted tighter restrictions for most states in a bid to curb the spread of the coronavirus. The partial reopening has meant that more people remain unemployed hence the need for this new relief package.
However, this package has been held up by U.S. politicians until just this Sunday when it was signed into law, putting many Americans in jeopardy. The relief package includes a $300 billion relief injection for small businesses and a $300 per-week top-up in unemployment insurance running to mid-March 2021.
Bitcoin Over Fiat
In March 2020, when the first relief was signed, and $1200 checks were sent to Americans, crypto exchange firm Coinbase recorded increasing deposits worth exactly $1200. Since then, BTC’s value is up threefold. On the contrary, the dollar has shed up to 10% value against the euro in the same period. The pandemic has shone a light on cryptocurrencies’ strengths, especially Bitcoin, over traditional currencies regulated by the central banks.
With the Covid-19 relief, packages come printing of more USD, which in turn drives inflation for the world’s reserve currency, as witnessed recently. BTC’s supply is capped at 21 million, and it is impossible to drive inflation as not more than 21 million can be in supply. The first package highlighted this crypto strength and saw more traditional investors and fintech firms invest in cryptocurrencies, often BTC.
For instance, institutions like MicroStrategy and MassMutual invested in crypto, with the former holding over 40,000 BTC. Potential inflation or hyperinflation could have on the value of USD plummet severely. These institutions now consider BTC a safer store of value.
Lessons to Learn
This latest relief will only affirm what the crypto community has always emphasized regarding fiat currency’s potential to store value. It will be best that traditional financial institutions take their lessons seriously this time.