The excess printing of dollars and the subsequent inflation could be a boon for BTC and other cryptocurrency.
By Henry D. Chang
Photo by Bermix Studio
U.S. government spending may lead to increased Bitcoin (BTC) prices, according to Gemini crypto exchange co-founder and CEO Tyler Winklevoss. In recent tweets, he intimated that what’s ailing the U.S. dollar is good for bitcoin.
“The Fed continues to set the stage for bitcoin’s next bull run,” tweeted Winklevoss alongside a Wall Street Journal article examining further stimulus.
As of July 22nd, BTC has broken $9,500 and seems to be maintaining trajectory.
Turbulent economic times serve as a barometer of the long term efficacy of cryptocurrency and recent events have fared well for the financial instrument. Many analysts hypothesize that currencies not handcuffed to nation states or central banks have the propensity to weather inflation. Bitcoin appears to remain a prudent hedge in light of recent economic turmoil.
The ceiling of a 21 million coin supply insulates the instrument against dilution and fixes it to a finite inventory.
Winklevoss intimated at the over-zealous printing of the dollar by the U.S. treasury to keep up with stimulus demand in a July 18 tweet: “When money printer go brrrr and inflate the stonks market, it’s time to Bitcoin.”
The initial $2 trillion stimulus package has caused modest inflation yet fears remain about the effects of a potential, larger stimulus package in the works. Initial reports referenced additional personal and business stimulus to be more robust than the original. Nonetheless, congressional agreements on a new package have stalled. According to Forbes, “Republican and White House leaders are struggling to gain internal consensus on an initial stimulus package proposal. During a lunch meeting on Tuesday, Senate Republicans repeatedly clashed with each other as well as with Treasury Secretary Steve Mnuchin and Trump Chief of Staff Mark Meadows over the bill.” Ruttering the new stimulus package is Senate Majority Leader Mitch McConnell. He told a news conference last Tuesday, “I’m going to introduce a bill in the next few days that is a starting place, that enjoys fairly significant support among Republican senators – probably not everyone.” Despite the minutiae of how the next stimulus package will look, there is general consensus that it will affect crypto values in one way or another. Though not everyone is as confident as Winklevoss about how Bitcoin will endure further stimulus, inflation, and/or continued market volatility. According to one quantitative risk indicator, the currency could see downsize breakouts comparable to 2018 when it went from $6,500 to $3,400.
Still, the overarching narrative is positive. Founder of Capriole Investments, Charles Edwards believes the ‘meat-and-potatoes’ fundamentals of BTC look great: “I have a very bullish outlook in the mid to long term. For example, energy value is at all time highs, suggesting BTC is more valuable than ever before. When this is increasing, it is historically very bullish.”