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ECB & US fiscal stimulus likely to help Bitcoin cross $7k mark soon

Bitcoin, along with other cryptocurrencies, is likely to rally further in the coming days, even as countries worldwide are expected to print more fiat currency as a last resort to fight the economic crisis caused due to the novel Covid19 virus.

The most valuable virtual currency rallied to nearly touching the $7k mark at $6,981 after the US government announced a massive $2 trillion coronavirus stimulus package that includes business loans for distressed companies, unemployment insurance benefits, and launch of a digital dollar among others.

However, the crypto couldn’t sustain itself for much longer and dropped by one percent to trade at $6,635. According to CoinDesk’s Bitcoin Price Index, Bitcoin had rallied from $5,700 to $6,700 in the last few days.

Experts tracking the crypto segment are of the view that Bitcoin is likely to rally further if countries start printing more fiat currencies resulting in increased supply and decrease in value of the money.

The European Central Bank has also announced last week that it would launch a 750 billion euro emergency bond purchase scheme to stop the financial turmoil induced by the Covid19 pandemic that broke out in China last September. With almost every European country facing a lockdown situation, the economic activity has come to a grinding halt, hinting at a deep recession like situation.

Kunal Nandwani, Founder of blockchain solutions provider Hashcove, said, “Bitcoin is a fixed number, and hence it has a value.  Fiat currencies are not, and hence the more you print, its value decreases.”

“…all the glory that the Bitcoin sees since yesterday is because of the fiscal stimulus announced in the United States. Besides, the US government also hinted that they had found a solution for the novel virus,” added Sathvik Vishwanath, Founder, Unocoin. 

Historical data suggests that the prices of Bitcoin and other digital currencies tend to move up every time there is an economic turmoil or financial relief is announced. Experts say that such a situation leads to inflation and that it would boost Bitcoin’s rally further. According to crypto enthusiasts, Bitcoin is likely to cross $7000 soon as equity markets across the world are on free-fall.

“Fiscal stimulus naturally means higher inflation. In such scenarios, informed investors tend to move away from cash to other alternatives. Since equity markets are in turmoil, it’s usually gold that gets these investments during incoming inflation. This time around, Bitcoins rally has shown that people around the world consider Bitcoin to be an option to protect themselves from currency inflation,” said Nischal Shetty, Founder of P2P crypto-trading platform WazirX.

The Bitcoin has been marching ahead ever since the pandemic broke out, claiming over 15,000 lives globally. While there is no vaccine or cure for the deadly flu-like disease, health experts have been advising people to maintain social distancing as a remedy. As a result, people are resorting to digital payments fearing that cash could be a potential carrier of the virus.

Gold, which is considered a “safe haven,” by investors, has remained quite volatile in the past few weeks but rallied on the US fiscal stimulus announcement. Spot gold today rose as much as 1.6% to $1,635.79 on March 25, highest since March 12.

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