While all politicians in the United States responded to the outbreak of the Corona virus by proposing a stimulus policy, Tlaib was the most significant. The program she outlined (including temporary Global Basic Earnings) was for the United States Mint to issue “Two $ 1 trillion platinum coins” that Federal Reserve will buy, ie. credited 2 trillion dollars for the Department.
Although some people think that this measure is necessary to ensure the economy does not collapse further, many people in the Bitcoin space laugh at it because this news only proves the absurdity of economics. fiat.
Price increase for Bitcoin
Bitcoin bulls are pleased with this proposal. President Michael Goldstein of the Nakamoto Institute made a joking joke when answering the news:
Don’t worry, you will be able to buy a fraction of a Bitcoin with a $ 1 trillion coin. https://t.co/OBD4RvkkST
– Michael Goldstein (@bitstein) March 21, 2020
“Don't worry, you can buy a fraction of Bitcoin for 1 trillion dollars.”
Certain economists and analysts are certain that this plan will cause widespread money supply inflation in the United States, which theoretically leads to rapid commodity inflation.
Other people in the cryptocurrency space also agree. The relentless printing of money by the authorities will only cause inflation, thereby proving the value of Bitcoin is algorithmically limited with a fixed supply of 21 million coins.
Print money to pour into traditional markets
Even if this radical plan fails to materialize, the U.S. government and the Federal Reserve have announced strong stimulus measures that analysts think will prove Bitcoin value as an asset saying no to inflation. broadcast.
On Tuesday, the White House took urgent measures to save the economy. Including: sending checks to every American who is often referred to in the Bitcoin space as “Helicopter money” to help cover living costs while unemployment rises and billions of dollars lend to small businesses and ” stabilization fund. “
Along with these measures, the Federal Reserve – the US central bank – has declared its own effort to keep the economy stable. Including but not limited to:
- 700 billion dollars to buy large-scale assets, open market operations, quantitative easing; $ 200 million of mortgaged securities and the Fed bought $ 500 billion in Treasury.
- Eliminate reserve requirements: banks do not need to reserve any money from the sender.
- The policy of emergency interest rate cut 1%, 100 basis points.
The BitMEX research team has released Tuesday's report on monetary and fiscal stimulus in this macro environment. They conclude that, although it is not known when it will occur, the inflation shock of the 1970s (inflation of 7% to 15% per year) will change the economic model due to the stimulus policy.
They wrote that this would only help Bitcoin:
“In our view, in this changing economic regime, where the economy and financial markets are loosened, that may be the greatest opportunity Bitcoin has had in its short lifetime.”.
The correlation between Bitcoin and S&P 500 is high of the 2 years
The correlation of BTC, Down Jones and S&P 500
The team at Santiment recently released a report proving that the BTC correlation with the S&P 500 is at a 2-year high. They conducted research when both the cryptocurrency and stock markets were hit hard by the impact of the Corona virus. In the report, the group has explain correlation:
“Within the past week, the correlation of Bitcoin with the S&P 500 has risen to a 2-year high and is currently hovering. in 0.6 ”.
They further explain the value of 0.6 as follows:
- 1 -> BTC and S&P move exactly the same
- 0 -> BTC and S&P move completely independently of each other
- -1 -> BTC and S&P move in opposite directions
With #Bitcoin'S correlation with the # SP500 currently at a 2-year high, we have just released an in-depth research article into what we can collectively learn in regard to this unprecendented downturn among both markets.https://t.co/LZnfqYHdzS
– Santiment (@santimentfeed) March 20, 2020
“With the Bitcoin correlation and SP500 is currently at its 2-year high, we have just published an in-depth research paper on what we can learn about recession in general. never happend at all 2 market”.
Bitcoin is predicted to recover faster than the traditional market
At the end of the report, the team proposed that Bitcoin and cryptocurrency will recover faster than the stock market. Because the cryptocurrency market is a new type of economy, it has not been constrained by the complexity of traditional markets. Specifically:
“Crypto is a new type of economy that facilitates the production of digital values designed for distribution in a pure, peer-to-peer manner. These factors and correlation factors have contributed to the rapid recovery of the cryptocurrency market in the past and will certainly do the same thing again.
On the other hand, traditional markets are still overloaded with too many moving parts on it. The Wall Street apparatus is partly digital (notably the most responsible for growth in recent years) but the majority is still physically physical.
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