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The second stimulus package that was confirmed by Treasury Secretary Steven Mnuchin is being viewed as a long-term bullish call on crypto assets.
As the coronavirus economic hardship left a significant portion of American citizens jobless, Treasury Secretary Steven Mnuchin confirmed the release of the second stimulus package. Coincidentally, the $1200 per person check has come at a time when digital assets’ volatility is spiking by the day.
According to analysts, the overall effect of this huge stimulus by large global economies is likely to play out well for the crypto assets in the long term. This is because the U.S. federal government has become a fast printing money system that is injecting more cash into the market to cushion its economy from the coronavirus pandemic. On the other hand, the supply of most crypto assets led by Bitcoin is known and limited. This leaves the crypto industry with little to zero long term inflation.
As crypto adoption becomes recognized through clear regulations, more money is anticipated to flow into the digital asset industry.
With limited opportunities to invest in during the pandemic, a large number of people are taking the advantage of investing in leading crypto assets and other smaller similar projects for both short term and long term basis.
Second Stimulus Package and Its Impact on the Crypto Industry
Research figures indicate that a huge number of people invested their previous package to Bitcoin, which might trigger a similar wave with the second stimulus package.
Perhaps to widen the scope of view, let’s put things into perspective. For those Americans that invested their first $1200 checks in Bitcoin right away, their package is worth almost $2000 as of the time of publication.
With traditional stock markets led by Dow Jones Industrial Average (DJIA) being down over 7% year to date, their profitability is too low in comparison to most crypto assets.
Secondly, hedge fund managers have been moving large amounts of their capital to different crypto assets, as observed by Grayscale metrics. This might serve as a wakeup call to most people not to bet against the technology. Fear of missing out, popularly referred to as (FOMO) in the crypto world might lure a huge number of Americans to invest their government given check into the crypto market.
With financial institutions now given a go-ahead to act as digital assets custodian for the consumers, crypto banking will probably take center stage with this stimulus package and forward.
However, the bullish effect might not be direct and immediate, this is because the U.S. dollar thrives on being a world reserve currency. The pandemic will surely raise the demand for U.S. dollars as economies begin to reopen. Two to three years, the effect will be inevitable as crypto adoption continues globally.
In the bigger picture, if more Americans invest their stimulus package to digital assets, more money will reciprocate to a larger market cap that is a factor in digital asset pricing.