90 million = 1% increase! How much more will Bitcoin rise under the 1.9 trillion fiscal stimulus?

Strategists at Bank of America Corp. believe that the price of Bitcoin may be more affected by capital inflows than some other assets. "We estimate that as long as there is a net inflow of $93 million into Bitcoin, the price of Bitcoin will appreciate by 1%, while the figure for gold will be close to $2 billion, or even 20 times higher," the bank's strategists said in a report on Wednesday. In contrast, the same analysis of Treasury bonds with maturities of more than 20 years shows that the flow of billions of dollars has no significant impact on prices, indicating that the U.S. Treasury market is larger and more stable." JPMorgan strategists pointed out that in terms of US dollars, institutional funds flowing into Bitcoin this quarter increased by 20% from the previous quarter, while retail funds flowing into Bitcoin increased by 90%.

Cryptocurrency's credibility as an asset class is growing as robust products and derivatives markets develop, institutions are entering the space, and prices are rising. Some see Bitcoin as an attractive digital alternative to gold or a possible refuge from inflation due to its limited supply. Still, others see it as a speculative bubble, while also raising concerns about issues such as its energy consumption and actual value. Bank of America noted that because about 95% of Bitcoin is owned by the 2.4% of addresses with the highest balances, "it is impractical to use it as a payment mechanism or even as an investment vehicle."

As an asset that is still volatile and illiquid, the price action of Bitcoin may only depend on current market conditions. Jeffrey Halley, senior Asia Pacific market strategist at Oanda, said on Thursday: "Bitcoin's price action is largely determined by market speculative sentiment, but large and rapid up and down fluctuations also show the lack of two-way liquidity in the market."

Another factor that could push up Bitcoin prices is that the largest holders are still long on Bitcoin, according to Bank of America. Bank of America noted that many so-called "whales," or institutional account holders, are actually buying Bitcoin, not selling it. They said: "Looking at detailed blockchain records, we found that the largest addresses have not been sold since the beginning of the pandemic." Bank of America analysts said: All in all, the most important factor driving Bitcoin prices in recent years, especially since 2020, is the inflow of capital.

With the issuance of Biden's $1.9 trillion stimulus bill checks this week and the Fed's dovish stance boosting market optimism, the Bitcoin market's capital pool is expected to expand further. Plan B's founder said: "There are more factors supporting the continuation of the current bull market, and I believe that cryptocurrencies will exceed $100,000. It is even expected to reach a high of $288,000."