The price of Bitcoin surged 4% to $51,000 on Sunday after the United States Senate passed the expected $1.9 trillion stimulus bill.
The measure, which was passed by a 50-49 vote, heads back to the House for a Tuesday vote. If approved, the package will be sent to U.S. President Joe Biden for signing.
“Today I can say we’ve taken one more giant step forward in delivering on that promise, Biden said. “That help is on the way. It wasn’t always pretty, but it was so desperately needed, urgently needed.”
The historic fiscal stimulus plan is aimed at accelerating economic recovery. As part of the bill, payments of $1,400 will be distributed to millions of Americans.
Furthermore, the legislation would provide $300 in weekly unemployment benefits through early September.
Why is the stimulus bill good for Bitcoin?
The past year has shown that stimulus packages increase investors’ interest for risk-on assets such as stocks and cryptocurrencies.
As a result, when the first stimulus bill was passed in April 2020, it sparked a massive bull run. In both the stock market and cryptocurrency market.
Moreover, analysts expect the latest stimulus bill to have a similar effect on the price of Bitcoin in the short term. “The devaluation of the purchasing power of the U.S. Dollar has only just begun. Long-time trader Peter Brandt said.
“This is why Bitcoin, real estate, U.S. equities and commodities will continue to trend higher when expressed in $USD fiat terms.”
The stock market and cryptocurrencies usually match up. So if Wall Street recovers this week, it could be a good sign for Bitcoin and other digital assets.
George Ball advocates for crypto as hedge against inflation
The chairman of investment firm Sanders Morris Harris, George Ball, believes cryptocurrencies are an effective hedge against inflation.
“Longer-term, if inflation is back, if we start to debase the currency badly. Then the cryptocurrencies have a great deal of allure.
“With the cryptocurrencies, I think there is a fundamental hydra-headed shift that makes them attractive as a part. A small part, of almost any portfolio.”