Bitcoin price hits $51K as U.S. Senate passes $1.9 trillion stimulus
The price of Bitcoin (BTC) reached over $51,000 on March 7 after the U.S. Senate passed the anticipated $1.9 trillion stimulus bill, which is roughly two times larger than the market capitalization of BTC.
United States’ President Joe Biden said that the Senate’s approval shows major progress in delivering a “desperately needed” stimulus bill to Americans. He said:
“Today I can say we’ve taken one more giant step forward in delivering on that promise, that help is on the way. It wasn’t always pretty, but it was so desperately needed, urgently needed.”
Why is the stimulus bullish for Bitcoin price?
When a stimulus bill gets passed, it immediately relaxes the financial conditions in the U.S. The past year has shown that the effect of such measures raises investors’ appetite for risk-on assets, including stocks and cryptocurrencies.
In April 2020, when the first stimulus bill was passed, it coincided with a massive bull run in both the U.S. equities market and the cryptocurrency market.
Naturally, investors anticipate the second stimulus package to have a similar effect on the price of Bitcoin in the short term.
Peter Brandt, a long-time trader, said the devaluation of the purchasing power of the U.S. dollar has only started.
The combination of a devaluing dollar and the new stimulus package would likely cause the market sentiment around Bitcoin to improve. Brandt wrote:
“The devaluation of the purchasing power of the U.S. Dollar $DX_F has only just begun. This is why Bitcoin $BTC, real estate, U.S. equities and commodities will continue to trend higher when expressed in $USD fiat terms.”
If the U.S. stock market begins to recover after a week-long pullback, it could further catalyze Bitcoin given that equities and cryptocurrencies fell in tandem during the recent correction.
Chinese companies following MicroStrategy’s strategy?
Atop the improving macro environment for Bitcoin, the first Chinese listed company called Meitu has officially bought $40 million worth of Bitcoin and Ethereum. The company stated:
“The Group has purchased 15,000 units of Ether and 379.1214267 units of Bitcoin (BTC), both cryptocurrencies, in open market transactions at an aggregate consideration of approximately US$22.1 million and US$17.9 million respectively, on March 5, 2021.”
“The first Chinese listed company to buy a large amount of Bitcoin appeared,” a popular Chinese journalist by the name of Wu Blockchain commented on March 7. “Photo-retouching software company Meitu announced that it would buy Bitcoin and Ethereum for 40mln$. But its founder was criticized for issuing multiple ICOs in 2017.” He added:
Meitu said that crypto has enough room for appreciation, it can diversify the risk of holding cash in fund management. Affected by this, there may be more Chinese companies buying Bitcoin to boost their stock prices, but they may also be banned by the Chinese government.”
If a new trend emerges where public companies in Asia begin to buy Bitcoin, it could lead to an influx of new capital into the Bitcoin exchange market.
While it is unlikely that many publicly listed companies in China would announce Bitcoin purchases due to the uncertain regulatory environment, countries like Japan and South Korea could see a similar trend occur in the next few months.
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