Both Democrats and Republicans are in favor of sending another round of stimulus checks. Thus, we can expect the checks to arrive as soon as next month. Now is the right time to plan how you will spend your stimulus check. If you are among the few that plan to invest their coronavirus stimulus checks, then some of the best advice you may get is to put it in bitcoin.
Why invest coronavirus stimulus checks in bitcoin?
There are plenty of reasons why people should their invest coronavirus stimulus checks in bitcoin. The first and foremost reason is inflation. Investing in cryptocurrencies will protect your investment from inflation as bitcoin is a non-inflationary asset. There are only 21 million units in circulation, which have increased in value since the cryptocurrency's creation in 2009.
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Any other asset may fail to give such protection, considering that the Federal Reserve’s balance sheet has increased by about $3 trillion since the start of the coronavirus pandemic. Many also expect it to grow by another $2 trillion to $5 trillion before the end of the year.
Another reason to invest coronavirus stimulus checks in bitcoin is that it is a better hedge than other assets. Many expect the stock market to crash in the near future. Their expectation is based on the unprecedented and unexpected boom in the stock market during the current crisis.
Bitcoin has proven to be one of the best assets to invest in over the past decade. The cryptocurrency’s price has steadily appreciated since its creation in 2009. One bitcoin is currently worth about $9,600. Had you invested in bitcoin five years ago, you could have received a return of over 3,300%.
Many did the same with their first stimulus check
Although investing in bitcoin comes with its own set of risks, including high volatility, the cryptocurrency has outperformed many traditional assets in the long run. Moreover, it is attracting a lot of institutional investors now, including endowments like Harvard and billionaire hedge fund manager Paul Tudor Jones.
Additionally, bitcoin is now easy to use. New technologies such as the Lightning Network allow you to use it to make payments. Moreover, you can easily and quickly send it to anyone around the world.
If you want one more reason, it is believed that many invested their first coronavirus stimulus checks in bitcoin. According to Brian Armstrong of Coinbase, the number of transactions with the amount of $1,200 increased by about fourfold on the exchange in April. Those who did this would have made a return of over 40% now.
It is believed that the expectation of another $1,200 check is driving the bitcoin price. Following the developments about the $1 trillion stimulus package last week, the bitcoin price rose past $9,500 to surpass the $9,000-$9,500 volatility range.