The Internal Revenue Services (IRS) and the Treasury Department have begun delivering a fresh round of $600 stimulus checks to American citizens to curb the financial effects of coronavirus.
“WASHINGTON – Today, the Internal Revenue Service and the Treasury Department will begin delivering a second round of Economic Impact Payments as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 to millions of Americans who received the first round of payments earlier this year,” the IRS said in a press statement.
The pandemic led to the loss of more than 20 million jobs in America as restrictions were effectively put in place. The global economy took a downturn in March as assets tumbled due to coronavirus fears.
Will bitcoin get a boost?
Last year, the price of bitcoin showed that the digital asset is at least correlated to some of the global events. The asset’s price tumbled to less than $4,000 as the world tried to make sense of forced economic, social, and health changes.
However, stimulus packages have previously worked in favor of bitcoin. When the first round of relief aid hit the bank accounts of Americans, the price of bitcoin significantly rose in value by the end of April.
The stimulus packages cause the government to switch on its money-printing machines, which leads to inflation. As the dollar loses its value, bitcoin is seen as a hedge.
The price of bitcoin was buoyed by governments stimulus in 2020 and this latest round of relief aid could spell good news for bitcoin holders.
The digital asset, which closed 2020, on a tear, was the best performing institutional asset of the just-ended year.
Bitcoin breached $29,000 towards the end of last year and has its eyes on $30,000.
While the supply of money is infinite and the amount in circulation can be increased on a whim, bitcoin has a hard cap, making it a scarce asset. This scarcity is seen as a major factor in retaining bitcoin’s value over time.
With more institutional capital flowing into the industry, bitcoin will be “more scarce.”
Will the stimulus money be used to buy bitcoin?
The relief aid is intended for struggling individuals and households who have to make ends meet. However, an online service was created to gauge the profits (or losses) that individuals would make if they invested in bitcoin.
It should be noted that bitcoin is volatile and analysts warn that should people buy the asset en-masse, its price could tumble and the relief aid will be worth a little less.