Bitcoin price is trading at above $52,000 currently, yet less than one year ago from today it struggled to crack $10,000. Failure sent the cryptocurrency plummeting to Black Thursday lows, but from there confirmed the bear market was over, and has been in an uptrend ever since. During that time, compared to all other assets, Bitcoin has emerged as “the stimulus asset” over gold and the dollar. Here’s more on how this came to be, along with what this means for the first ever cryptocurrency moving forward.
Bitcoin Emerges As The Stimulus Asset, According To DoubleLine Capital CEO
Bitcoin is is off to an incredible start to the year, after closing out 2020 as the best performing asset bar none. The epic rise from lows set during the pandemic panic selloff in March to highs reaching now over $50,000 is nothing short of incredible.
During a year that left much of the world reeling, Bitcoin showed its true strength.
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Much of Bitcoin’s initial uptrend was driven by money incoming from government-issued stimulus checks. Bitcoin has grown over 690% since those checks were issued, meaning anyone who invested the full thing into the cryptocurrency, would now have over $8,200 to show for it.
I am a long term dollar bear and gold bull but have been neutral on both for over six months. Lots of liquid poured into a funnel creates a torrent. Bitcoin maybe The Stimulus Asset. Doesn’t look like gold is.
— Jeffrey Gundlach (@TruthGundlach) February 18, 2021
DoubleLine Capital CEO Jeffrey Grundlach says that during that time, the performance of Bitcoin has made it “the stimulus asset” over gold. Evidence of the digital gold narrative working is everywhere in finance, but nowhere more notable than the cryptocurrency’s ballooning market cap, which is now on track for $1 trillion any day.
But what Grundlach is likely referring to isn’t what happened with stimulus checks, but instead what stimulus money in general created for an economic environment.
The price of each Bitcoin has grown by nearly 700% from the time stimulus checks were issued | Source: BTCUSD on TradingView.com
No Asset Class Has Benefitted More From The Pandemic Than Crypto
When the pandemic began, to combat the panic selloff in the stock market and elsewhere, and to stave off any economic impact lockdowns could have, governments began putting together stimulus packages to assist citizens with unemployment, offer loans to businesses, and much more.
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The expansion of the money supply created more and more dollars. Many of those dollars have since been converted into stocks, gold, and of course, Bitcoin. The impact of this kept stocks rising while the GDP sank, and gold initially began to trend upward.
It wasn’t until public companies began announcing they were holding BTC that the gold trend began to wane. Cryptocurrencies like Bitcoin offer a hard, limited supply amidst a time when money supply expanding rapidly, which is what truly makes BTC the “stimulus asset” over other assets like the dollar and gold.
Featured image from Deposit Photos, Charts from TradingView.com