The world was watching yesterday as an angry mob stormed the United States Capitol building, the first time that the building had been breached by intruders in more than 200 years.
Twitter was abuzz with commentators on both sides of the ideological fight: some tweeting to condemn the rioters and others cheering them on.
However, there was a third group of people that seemed to have something else on their minds: as the mob moved into the Capitol building, the price of Bitcoin reached past $37,000 for the first time ever.
US: “capitol hill has been taken over”
— Annalese (@Annalese_BNT) January 6, 2021
Further Stimulus Efforts May Benefit American Families in the Short Term, but Could Cause USD Inflation in the Long Term
However, once the noise around the election certification and transition of power settle down, Bitcoin may still be in for further boosts.
This is due to the resumption of economic stimulus that is widely believed to take place after President Biden steps into office and the Democratic majority takes hold of the Senate. On January 6th, future Senate Majority leader, Chuck Schumer said that passing a bill to issue $2000 stimulus checks to the public is “one of the first things” he “want[s] to do.”
While millions of American families are in desperate need of relief from the economic stress brought about by the COVID-19 pandemic, a number of analysts have warned that continuing stimulus could eventually weaken the USD past the point of no return.
Indeed, before the election was called in November of 2020, Ulrik Lykke, Executive Director at cryptocurrency hedge fundARK36, told Finance Magnates that macroeconomically speaking, “the issue of who will be the next President may not have as great of an impact on crypto as many expect,” told Finance Magnates.
After all, “Biden will likely continue the current administration’s policy of bringing more stimulus to the fragile economy, still suffering as a result of the COVID-19 pandemic.”
This appears to be the case. (After all, it was Donald Trump who initially proposed $2000 stimulus checks.)
Before the results of the election were called, Celsius Founder and Chief Executive, Alex Mashinsky told Finance Magnates that any way you slice it, continuous government spending is a slippery slope: before the election was called, he said that: “a Trump presidency would mean more tax cuts and bigger deficits, while Biden will bring more healthcare and social spending and bigger deficits.”
“Combine either with the Fed continuing to do whatever it takes to keep the safety net under the US economy, and you can see how a mountain of debt, greater than all the debt anyone had in history, will come bearing down on the US dollar.”
The Future of the United States Hangs in the Balance
And indeed, it seems that this pressure on the USD, rather than any pressure that civil unrest could place on the dollar, is a larger threat to the status quo.
Alex Mashinsky explained that over the long term, continued spending could chip away at the Dollar’s position as the world’s most powerful currency.
“We may be able to hold back the debt for a while, but each passing day we deplete the trust the entire world has in the dollar and soon enough we will be left holding the bag with all these worthless dollars,” he said.
“While this may be good for Bitcoin and crypto, it is not good for democracy and for the world order as we know it.”
What do you think of the possible effects that civil unrest at the United States Capitol had on Bitcoin? What effects do you think that stimulus efforts will have on the future of the nation’s economy and on BTC? Let us know in the comments section.
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