It has been noticed that due to the coronavirus outbreak during the middle months of 2020, the price or value of bitcoin had fallen to half. But soon after, a sudden boost has taken place, and by the end of 2020, it crosses the range of $28,000. On the starting day of 2021, the value of bitcoin became more than $29,000.
So, what is the reason behind this surge price of Bitcoin? There are a ton of theories in the market that are identified by the experts of the Bitcoin Champion. They also say that stimulus checks are one of the reasons for bitcoin’s rising price. Now let’s head to the main topic.
Stimulus Check
The United States Government sends a check to its taxpayers with the intention of stimulating the economy. With Stimulus checks, the government offers consumers some spending money. When the consumers spend the money, the consumption is boosted along with increased revenues. It allows the retailers as well as manufacturers to drive the revenues. This way, stimulus checks help to spur the economy.
The larger federal stimulus package that is created to support the economy may also include the stimulus check. For example, take the stimulus payments that are a part of the CARES or the Coronavirus Aid, Relief, and Economic Security Act in 2020, which has been spent during the coronavirus outbreak.
The Effect of Stimulus Checks in Inflation
The stimulus checks are distributed with the intention of boosting the economy. The theory also says that when the consumer spends the amount given in the stimulus check, it creates demands, which lead to more production and increase employment. Eventually, the economy gets settled.
In most cases, the stimulus checks are spent on providing essential commodities, such as food, electricity bills, and more things like that. In most cases, people do not use the stimulus checks in order to buy furniture or other secondary demands. So, as a result of it, the economy is not going up. Naturally, inflation is developed in critical situations.
Effect on Bitcoin Price Rise
We always witnessed a price rise of gold during any inflation. And in the last few months, we have seen a price rise from around $3,000 to $29,000, which is nine times. Bitcoin is being considered as digital gold nowadays. During the last 12 months, more and more institutional investors also started taking Bitcoin much more seriously. And experts are saying that 2021 will be an exciting year of Bitcoin.
With its limited availability in the market, just like gold, it is considered an excellent option to invest now and get higher returns on later days. When the value of the dollar is decreasing or falling, people start to invest the extra money that they have on gold or on an asset that has the potential to return a higher value later. Usually, gold is considered the most likable asset. Some also invest in the share market or real estate.
Now, Bitcoin has become the digital version of gold. It has a limited option in the market. Just like the amount of gold in the market is fixed, the number of bitcoins is also fixed. So, there can never be more than enough Bitcoin. And it also has the potential to return a much higher value in the coming future. You need to be patient.
Conclusion
From the earlier discussion, we can come up with a conclusion that though stimulus checks are not the only reason for the rising price of Bitcoin. But it is one of them. Whenever inflation occurs, people will start investing in gold and digital gold, i.e., Bitcoin, as they can give them a much more return after some months or some years. The price of a dollar may fall, but the value of bitcoin is increasing due to its limited amount.
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