How the $ 8 trillion global stimulus packages will affect Bitcoin
Countries around the world are massively expanding their debt to combat the effects of the corona virus, with global measures now over $ 8 trillion, according to Bloomberg.
The US passed a $ 2 trillion stimulus package in March and promised $ 1,200 checks to all US citizens. Japan announced its own $ 1 trillion deal last month, and the G20 leaders have proposed $ 5 trillion stimulus payments.
US debt alone has recently exceeded $ 24 trillion as the Federal Reserve injects unprecedented amounts of money into the economy and tries to counter the effects of the pandemic.
Bank of America analysts forecast that the Federal Reserve's measures could result in its balance sheet reaching over $ 9 trillion by the end of 2020 - more than 40% of US gross domestic product (GDP).
At the same time, Krishna Guha, vice chairman of Evercore ISI, believes it could reach as much as $ 12 trillion by the middle of the year, which is 60% of US GDP.
For their part, both Germany and Italy have already committed over 30% of their respective GDP to efforts such as direct spending, bank guarantees, and credit and capital injections.
"GOVERNMENTS AROUND THE WORLD ARE LAUNCHING FISCAL SUPPORT MEASURES, BUT NOT ALL FISCAL PACKAGES ARE THE SAME," SAID CHUA HAK BIN, A SENIOR ECONOMIST AT MAYBANK KIM ENG RESEARCH IN SINGAPORE, ADDING, "DURING 'FISCAL BAZOOKAS' IN THE AS ADVANCED ECONOMIES ARE THE NORM, EMERGING ECONOMIES DO NOT HAVE THIS TYPE OF AMMUNITION AND FISCAL LEEWAY. YOUR FISCAL PACKAGES ARE MORE WATER PISTOLS THAN ROCKET-PROPELLED GRENADES ”.
How will it affect bitcoin?
While the extreme speed at which states are printing money to counter the economic impact of the pandemic could be worrying in the long run, some experts believe that this is actually "good for Bitcoin", especially as the next cut in half is imminent.
"FROM TODAY'S PERSPECTIVE, WE ARE CLOSE TO SEEING AN INCREASE OF 182% FOR BITCOIN SINCE THE LOWS OF DECEMBER 2018, AND THE INCREASE WE ARE CURRENTLY SEEING IS AN OPTIMISTIC PICTURE FOR THE MONTHS AFTER THIS THIRD HALVING," SAID JOSHUA MAHONY , A SENIOR MARKET ANALYST FOR IG GROUP, A UK-BASED DERIVATIVES COMPANY.
Mati Greenspan, the founder of Quantum Economics, came to a similar conclusion, noting that Bitcoin , as central banks have recently confirmed their commitment to the creation of more "free money", now Bitcoin the system with the best performance this year will be.
"THE WAY HE HAS BEEN DOING ALMOST EVERY YEAR SINCE ITS INCEPTION," HE ADDED.