The White House and Senate have in the last couple of hours agreed on a $2 trillion cash bailout to keep the U.S economy going. In addition, it will be adding $6 trillion in reserves. In lay-mans language, the FED will print in excess of $2 trillion which will be used to stimulate the economy.
Around $1 trillion of this will go to ‘helicopter’ money. Every house is expected to receive $1,000 to ensure they can foot bills during the Corona pandemic.
Another huge amount will be used to bail out companies that have been forced to shut down or minimize operations during the pandemic. The FED is also going to be initiating an infinite QE. This will allow for the markets; bonds, equities and stocks to keep afloat.
The impact of these initiatives as pointed out by many analysts is expected to be felt for years to come.
As Jay Hao pointed out, the FED’s plan is set to work for now and ensure the U.S and by large the world economy continues smoothly. This especially as many have been panicking. But in the long run, just as witnessed in 2008, it will come back to haunt investors.
Bitcoin Failed Rally To FED’s Announcement
Because of this, he and a majority of analysts are calling on many to buy Bitcoin, the only monetary system with a sound mind.
With the announcement of the stimulus package, many expected Bitcoin to rally. However, Bitcoin has remained intact. In fact, at the time of press, it has recorded a marginal drop.
Trading at $6,600, Bitcoin is at a critical point as it sets up to test the $6,800 resistance. If this breaks, we could see Bitcoin go on to rally above $7,200. However, if this fails, Bitcoin could retrace and retest the $6K support before another upsurge can be expected.2:45 PM