President Donald Trump has finally signed off on the long-awaited $900 billion coronavirus relief bill, meaning many Americans will soon receive a second stimulus check for $600—though it could be significantly higher.
Back in the spring, as part of the first round of coronavirus stimulus measures, people received checks for around $1,200. That money, if used to buy the highly-volatile cryptocurrency bitcoin, could now be worth almost $5,000 after the price of bitcoin jumped from under $10,000 per bitcoin in April to almost $30,000 today.
“There will almost certainly be people receiving those checks who will have seen the continuous growth of the equivalent in bitcoin via Twitter accounts such as ‘$1,200 stimulus is now worth’ and want, naturally, to be part of it,” bitcoin analyst Jason Deane said via email, pointing to a Twitter account that has been tracking the value of the first stimulus check compared to bitcoin since April.
Deane has previously warned that if people invested their stimulus checks into bitcoin en masse it could be a “disaster”—and he maintains most people should be wary of putting their stimulus checks into bitcoin.
“The U.S. economy has continued to struggle through the effects of the pandemic and the reality is that although Wall Street has benefited from economic stimulus, Main Street arguably has not. Our view is that—for some people at least—although the desire to invest may well be higher, the ability to do so may actually be lower.”
Global stock markets have soared over the last few months as governments around the world flood them with cash to help keep economies ticking over. This has had a knock on effect to bitcoin, which has climbed from lows of under $4,000 per bitcoin in March to around $26,000 today—taking the combined value of all bitcoin tokens to around half a trillion dollars ($500 billion).
Meanwhile, bitcoin, due to its fixed limit of 21 million tokens, has developed a reputation as digital gold—with some high-profile investors naming it as an emerging hedge against the inflation they see coming as a result of unprecedented government money-printing.
“It is not surprising that people would want to take U.S. dollars and convert them into sound money,” outspoken bitcoin bull Anthony Pompliano, co-founder and partner at New York-based crypto hedge fund Morgan Creek Digital, said via email.
The bitcoin price has climbed over 250% during the last 12 months, helped on by support from payments giant PayPal
“The U.S. dollars that are being used to pay the stimulus checks is guaranteed to lose it’s purchasing power over time, while bitcoin’s structure is built in a way to protect and increase purchasing power over time,” said Pompliano.
“There is always risk associated with new technology and their adoption, but we are watching the adoption of this new technology in real time.”