what happened
Bitcoin’s price reached a new high of more than $ 37,000 on Wednesday after Democrats won two Senate seats in Georgia’s by-elections. Shares of MicroStrategy (NASDAQ: MSTR) and Grayscale Bitcoin Trust (OTC: GBTC) also rose sharply, closing the trading day by 12.1% and 11.5% respectively.
Approximately
The election in Georgia effectively gave the Democrats control of the Senate. Combined with their majority in the House of Representatives, Democrats and Elected President Joe Biden now have a greater ability to apply incentives.
Bitcoin, MicroStrategy and Grayscale Bitcoin Trust all reached new highs on Wednesday. Image Source: Getty Images.
While this stimulus can help the economy recover financial burdens for many Americans, it is likely to cost money as well. To pay for the stimulus program, the U.S. government will likely have to print more money. This could eventually lead to inflation and a fall in the value of the dollar.
Now what
Many people turn to bitcoin to protect their wealth from just such a situation. Due to its limited supply – a maximum of just under 21 million bitcoins will ever be created – some investors believe that the value of cryptocurrency will rise as fiat currencies such as the dollar fall in value as their supply increases.
Michael Saylor, CEO of MicroStrategy, is one of these investors. In August, MicroStrategy began using bitcoin as its primary treasury reserve asset. Since then, the business intelligence firm has bought 70,470 bitcoins, which are now valued at more than $ 2.6 billion. Its stock tends to track the price movements of bitcoin. It has risen sharply along with the cryptocurrency today.
Gray-scale Bitcoin Trust monitors the price movements of bitcoin even better. The trust owns approximately 0.001 bitcoin for each of its shares. The share price should, when multiplied by 1,000, theoretically be the price of one bitcoin, although Grayscale Bitcoin Trust tends to trade at a hefty premium on its underlying cryptocurrency exchange.