Policymakers round the world have committed unprecedented amounts of fresh money in an exceedingly bid to prevent an impending recession, or worse: a complete depression. within the u. s., the Senate approved a $2 trillion stimulus package in late March, and therefore the House of Representatives has now accepted a proposal from House Democrats for an additional $3 trillion meant to ease the wants of usa citizens who face an percent of nearly 15%. As a response to COVID-19, the FRS has undertaken a wave of quantitative easing unparalleled in its history.
As the monetary body to blame for managing the world’s reserve currency, the Fed uses quantitative easing as a method of infusing the economy with fresh liquidity. Having total control over money printing allows the Fed to print as many dollars because it wants, which it then injects into the economic system by purchasing assets on the open market.
Market observers recall the aftermath of the good Recession in 2008, when the Fed stated over $1.2 trillion worth of assets in mere four months as some way to pump fresh capital into the markets. However, the dimensions of quantitative easing undertaken within the wake of the COVID-19 crisis dwarfs anything that happened before, with the Fed putting no cap on the quantity of cash it plans to infuse into the system.
Over the past 2 1/2 months, the Fed has purchased around $2.8 trillion worth of assets. Unlike within the aftermath of 2008 when the administration limited its asset purchases to secure U.S. Treasury bonds, now around it's committed to purchasing riskier assets like corporate and municipal bonds likewise.
What should crypto investors expect?
U.S. bailout money is anticipated to travel toward helping public companies and preventing shareholders from losing their value. This new money is anticipated to inflate the value of assets, but since most Americans don't own assets, the sole result they're going to experience could be a weakening purchasing power. Beni Hakak, the CEO of LiquidApps, sees a chance for Bitcoin (BTC) to determine itself as a store of value:
"The COVID financial crisis is the first crisis that Bitcoin is experiencing as an asset class, and while some expected it to perform similar to gold, it led to a sharp decline in Bitcoin's price. As the world economy has started to open up, Bitcoin has recovered quite nicely, outperforming the S&P since their respective lows. With the Bitcoin halving behind us, an event that has historically been followed by a bull run, it will be interesting to see if Bitcoin can gain acceptance as a hedge against inflation and a store of value.”