Second Stimulus Check May Push Bitcoin Price Higher, Analysis Reveals

The stimulus packages in the United States and other countries were a primary factor for Bitcoin’s price rally this year. A new research from Cointelegraph Consulting suggests that if the U.S. approves another stimulus package by the end of the year, the price of Bitcoin could further increase.

While the coronavirus relief package is aimed at helping Americans who are struggling financially to stay afloat during the pandemic, a lot have used their stimulus checks to buy Bitcoin. The first evidence was when Coinbase CEO Brian Armstrong tweeted one week after the checks were released that the amount of deposits in the app worth exactly $1,200 have surged. That figure is the same amount as the stimulus checks.

If a second round of stimulus checks is to be released, it would be good for stocks and digital assets, Cointelegraph said, citing data that Bitcoin climbed as the S&P 500 also recovered. As the S&P reached a new all-time high, Bitcoin also reached a 2020-high of above $12,000.

Bitcoin is traded around the world on exchanges located in various countries. The growth in its price, the publication assessed, was due to numerous stimulus packages of various other countries including, Japan, the United Kingdom, and the European Union.

The stimulus package is not without consequences as it leads to more money in circulation, which could then lead to inflation. Investors who worry about the decreasing value of the dollar sought assets considered stores of value, such as Bitcoin and gold. Hence, the market saw the benchmark cryptocurrency and the shiny metal increase in tandem in the last few months.

Cointelegraph posited that if there will be a new stimulus package in the horizon, it can be expected that some would again use it to buy cryptocurrencies, which could therefore lead to further increase in price particularly for the benchmark cryptocurrency.

However, the publication also highlighted things that bull traders must be concerned about.

The stimulus was actually meant to be spent, not saved, to jolt the national economy. With that, cryptocurrency investors are advised to check the personal savings rate and the total indebtedness of households. If the savings rate remains at a higher level, the cryptocurrency market should expect an inflow of cash. However, if the consumer sentiment index has increased, it means people are into spending. In that situation, the cryptocurrency market may not be receiving additional funds, the report concluded.