Bitcoin Price Soared 80% In 12 Days; US Coronavirus Stimulus Bill May Push It Further

KEY POINTS

Bitcoin recorded its second straight day of gains following the news of an agreement between lawmakers of a giant stimulus package
Global stocks reacted positively when the agreement was made in the early hours of Wednesday and BTC also continued its move upward momentum
The new stimulus package could improve BTC and gold's price as the excessive supply of cash could put its credibility at risk

Since its alarming 50% freefall on March 12, Bitcoin has made a comeback 12 short days later. As of writing, the benchmark crypto is edging closer to its pre-crash level, but there's still a long way to go before it inches past $8,000.

Stocks were trading abysmally again on Monday, erasing all the gains since President Trump's election. Stocks had shared similar selloffs with Bitcoin recently, which had caused many market observers to draw a positive correlation between the two risky assets.

On Tuesday, when news broke out that lawmakers were nearing a deal to grant a giant stimulus package that would put direct deposits for all Americans and $367 billion in loans for small businesses, the financial markets rallied. The S&P 500 turned 9% higher, the Dow Jones Industrial Average improved by 11.37% and Nasdaq with almost 14%.

The most popular crypto recorded its second straight up day on Tuesday. And, at the moment, BTC continues its upward trend as an agreement among lawmakers was reported to have transpired in the early hours of Wednesday. Global stocks reacted positively soon after, with Stoxx Europe climbing 1.8% higher and the U.K.'s FTSE rising 1.7%.

Monetary policies have been stepped up as well to combat the economic toll brought about by COVID-19. The Fed promised to buy as much government-back debt as needed, and it also announced that it would purchase corporate bonds, even those among the riskiest investment-grade category.

"The Federal Reserve is committed to using its full range of tools to support households, businesses and the U.S. economy over all in this challenging time," the Fed's statement read.

All these money coming in from thin air are believed to boost the value of the hard forms of money such as gold since the now excessive supply puts the dollar's credence as a monetary unit at risk. And crypto proponents believe that since Bitcoin exhibits the same limited supply as with the precious metal, the new stimulus would do nothing but improve the crypto's price.

"As central banks take on more risk with unlimited QE, the 'credibility risk' rises accordingly. This credibility risk is positive for alternative currencies such as bitcoin and gold," said Denis Vinokourov of digital asset firm Bequant.