The impact of printing more USD?

It is no secret the Federal Reserve Bank (Fed) and the US Government have been printing US dollars due to the COVID pandemic and following the market correction of March 2020. But how much have they been printing and what impact has it had on Bitcoin? In this article, we’ll look at the impact of printing more USD and the possible correlation between the two.

How much money has the FED printed?

So, how much money has the Fed precisely printed since the pandemic started? The answer is a lot! According to estimates in March 2021, the US Money Stock graph below shows that people believe 35% of all US dollars currently in circulation were printed in the past 12 months. It’s important to note that this estimate does not account for the most recent $2.9 trillion Stimulus Plan from President Joe Biden, which has recently begun distributing $1,400 checks (along with other incentives) to Americans. Factoring that in, it means the US Government has printed well over 40% of all US dollars in existence during the last 12 months… you read that accurately – 40%! And it could continue as the President has already announced an additional new Stimulus Plan of $3 trillion (source: Reuters).

Is there any correlation between printing USD and the price of Bitcoin?

So, you might wonder, what is the correlation between the supply of USD and Bitcoin? Well as the US prints more and more money, investors are getting concerned about the value of their investments or their saving accounts in USD.

To protect some of their assets against devaluation, many US investors have turned to Bitcoin and Cryptocurrencies. The below graph shows the price action of Bitcoin since the US started printing money in April 2021. After dropping in March 2021, due to fears created by the COVID pandemic, Bitcoin price has soared a whopping 1200% to date!

Although the printing of USD is certainly not the only factor that has pushed the price of Bitcoin so high (one could also factor in the last Bitcoin halving from May 2020), it has played an important role.

Bitcoin is not the only coin that has benefited from the stimulus packages in the USA.  The below chart shows the entire market capitalization of the cryptocurrencies asset class. It has also soared by 1200% to date. With that said, it’s important to remember that, at the time of writing this article, Bitcoin alone accounts for almost $1 trillion of the total market capitalization of $1.7 trillion (Source: CoinCap). In other words, Bitcoin accounts for nearly 60% of the value of the entire asset class.

Conclusion

In conclusion, it would be fair to say that the printing of the USD has had a constructive impact on Bitcoin and the entire Crypto asset class during the last 12 months. As Joe Biden has mentioned, there could be even more to come, investors can remain optimistic with regard to the price of Cryptos at least for the short to mid-run (next 6 to 12 months). With that in mind, it’s important to monitor US inflation or interest rates since they could potentially bring an end to the euphoria.

Important Disclaimer: The content of this article or any content from CryptoCollge.cc is for educational purposes only and is not investment advice. Investors must do their due diligence before making any type of investment decision.

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