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How $8 trillion in government stimulus will affect bitcoin

Countries around the world are expanding their debts to fight the coronavirus. Tax relief measures worldwide have now totaled more than $8 trillion, according to Bloomberg.
The United States enacted a $2 trillion stimulus package, promising checks for $1,200 to all American citizens in March. Japan announced a $ 1 trillion deal last month and G20 leaders presented $5 trillion in stimulus payments.
The US debt alone has exceeded $24 trillion, as the Central Bank is injecting unprecedented amounts of money into the economy, trying to combat the impact of the pandemic.
Bank of America analysts predict that the Fed's actions could cause its balance sheet to reach more than $9 trillion by the end of 2020 - more than 40% of the U.S. gross domestic product (GDP).
At the same time, Krishna Guha, vice president of Evercore ISI, believes it could reach $12 trillion by the middle of the year, or 60% of US GDP.
For their part, Germany and Italy have already allocated more than 30% of their respective GDPs to efforts such as direct spending, bank guarantees and injections of loans and stocks. These stimuli totaled $1.84 trillion in aid, according to the International Monetary Fund.
“Governments around the world are taking fiscal support measures, but not all tax packages are the same,” said Chua Hak Bin, senior economist at Maybank Kim Eng Research in Singapore, adding that “while 'tax bazookas' are the standard in the most advanced economies, emerging markets do not have this type of ammunition. Their tax packages are more water pistols than bazookas. "
How will this affect Bitcoin?
While the extreme rate at which governments are printing money to combat the economic impact of the pandemic may be worrisome in the long run, some experts believe government and central bank stimuli are really good for Bitcoin, especially with halving approaching .
“At the moment, we’re up 182% for Bitcoin since the December 2018 lows, and the increase we’re currently seeing represents a bullish image for the months after this third halving,” says Joshua Mahony, an analyst at senior market of IG Group, a UK based derivatives trading company.
Mahony said the huge growth in flexibilization of the central bank and government debt highlights why many feel the need to store their wealth in alternative assets to avoid the apparent depreciation that can happen.
“This current bitcoin bullish move appears to be fueling the historic trend for halvings that could point to a huge rise next year. […] The truth is that the [governments] desperation to keep markets alive means that we are likely to see more and more stimuli come into effect. This is good for Bitcoin and other non-fiduciary assets, such as gold, ”said Mahony.
Mati Greenspan, the founder of Quantum Economics, reached a similar conclusion, noting that, as central banks recently reaffirmed their commitment to creating even more “free money”, Bitcoin is now the best performing asset this year. "As it is almost every year since its creation," he added.

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