As Biden preps $3T stimulus, Bitcoin could be set to erupt

Biden's fiscal stimulus plan could send the BTC price rocketing higher.

The incoming Biden administrations plan to flood the U.S. economy with trillions of dollars could ignite the next leg of the Bitcoin (BTC) bull market, as more investors seek refuge from a crumbling United States dollar.

Axios, an Arlington-based news outlet, reported Thursday that Joe Biden has asked Congress to provide Americans with $2,000 in stimulus payments to help offset the economic devastation of Covid-19. The incoming president has also proposed a $3 trillion tax and infrastructure package as part of his “Build Back Better” program.

Biden doubled down on his call for more direct relief to Americans following Fridays disappointing jobs report showing a loss of 140,000 positions in December.

He said:

If 2020 is anything to go by, the new tidal wave of stimulus could be another catalyst for Bitcoin as more money floods the market and makes its way into asset prices.

Even Donald Trump, a Republican, was no stranger to vast government outlays. Under his leadership, the United States passed a historic $2 trillion stimulus bill in March. Trump also signed a $900 billion relief package last month that would pave the way for $600 stimulus checks.

The federal governments inflation-boosting policies have coincided with record intervention from the Federal Reserve, which deployed trillions of dollars in 2020 to combat a liquidity crisis and keep overnight rates under control.

Although these policies provided a strong backstop for risk-on assets – a category that has included Bitcoin in the past – the emerging narrative surrounding BTC is that its a hedge against inflation.

This is not only corroborated by Bitcoin‘s historic outperformance over the past 11 years but also by the fresh wave of institutional money entering the market. Institutions are buying Bitcoin with a clear purpose, and may one day become the industry’s “mega HODLers.”

Bitcoins digital gold narrative has been one of the biggest catalysts behind the institutional shift towards BTC. This narrative helped fuel Bitcoin's 300% rally in 2020 and its more than doubling in price over the past three weeks. This trend could intensify in 2021 as the dollar's purchasing power continues to erode.

Even JPMorgan Chase has acknowledged that Bitcoin is taking market share from gold, the traditional haven asset. On Friday, one Bitcoin was worth more than 22 ounces of gold, which represents a new all-time high.