How To Invest A Stimulus Check in Bitcoin

If You Had Invested the First $1,200 Stimulus Check In Bitcoin, You Would Have Over $10,000 Today

You can be forgiven for feeling slight deja vu at the moment. It’s been barely two months since President Joe Biden took the oath of office, and hundreds of millions of Americans are once again preparing for a round of stimulus checks to drop into their bank accounts. After much haggling in Congress, the House finally approved the President’s $1.9 trillion stimulus bill on March 10, 2021. While some lucky stimulus receivers may need all that money to provide for their basic need, many will have the opportunity to invest their stimulus check, either partially or in full. Keeping any surplus money in cash is a non-starter since inflation will eat away at the purchasing power of your wealth. At the same time as fiat has been losing value, assets such as stocks, gold and Bitcoin continue to make highs.

Specifically, Bitcoin has been the best-performing asset class over the past year and the past decade, although it’s price is volatile in both directions. In just a month following the first stimulus check back in late March 2020, Bitcoin rose over 50% as the flood of new money rushed into its arms. In this article, we’ll review the case for investing a stimulus check in Bitcoin, understand why it is safe to do so, and learn more about the correct way to invest a stimulus check in Bitcoin. Let’s begin.

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Reasons to invest a stimulus check in Bitcoin

The US dollar has lost 23% of its purchasing power over the past decade1. During the same time frame, almost every major asset class has gone up, including stocks (up 256%), gold (up 25%) and Bitcoin (up 4986412%). If you don’t want your money to lose out to inflation over time, the only way to escape the destruction of your wealth is to invest. Out of all the assets out there, Bitcoin has several advantages that make it stand out as the asset of choice when investing stimulus checks.

1. It’s perfectly scarce: Stocks aren’t scarce at all. If you choose to invest in the shares of a company, the company can always dilute your holdings by issuing more shares. Gold is more scarce than stocks, but we’re still not 100% sure how many gold reserves are still waiting beneath the earth.
2. It’s not correlated to the rest of the market: Financial analysts use the correlation between two assets to determine how a change in the price of Asset A will affect the Price of Asset B. When it comes to constructing a diversified portfolio, they like to include uncorrelated asset classes where the price of Asset A is unaffected by any change in the price of Asset B. Having several uncorrelated assets in a portfolio can reduce the risk of the entire portfolio. As an asset class with its own unique characteristics, Bitcoin isn’t correlated to the rest of the market and is thus a perfect option for a portfolio.
3. It is uniquely yours: Every single asset you supposedly ‘own’, except Bitcoin, is actually held on your behalf by your bank or another financial institution. They can then lend out your funds without you knowing or consenting to the move, or even confiscate it in some extreme cases. Bitcoin is a sovereign bearer asset, which means that you own it directly and no one but you control what is done with your funds.

Is it safe to invest a stimulus check in Bitcoin?

As far as regulation goes, Bitcoin has cleared some major hurdles worldwide. Starting in 2019, the SEC explicitly declared that ‘Bitcoin is not a security,’ and therefore exempt from all the complex securities regulations. More recently, Bitcoin has received the blessings of regulators in Switzerland and Canada who have signed off on the creation of a Bitcoin ETF. Just watch Shark Tank judge and mega-investor Kevin O’Leary explain why the Swiss and Canadian decision to allow an ETF is such a boost for institutional adoption of Bitcoin.

Whenever there is a massive opportunity, there is usually a fair amount of misinformation that goes along with it. In Bitcoin’s case, it’s crucial to avoid dishonest players that can take advantage of newcomers in a variety of ways. For example, never invest in a scheme that promises to trade your cryptocurrency to yield incredible results. If the promised return is too good to be true, it most likely is. Fake brokers will use this trick to drain you of your precious funds Furthermore, even certain reputable companies that claim to allow people to invest in Bitcoin are not actually selling them the real thing. Instead, these platforms consist of derivatives called Contracts For Difference (CFDs), which allow traders to track the price of Bitcoin but not to buy real Bitcoin. For example, if you buy a Bitcoin CFD you won’t be able to send that Bitcoin to someone else as payment or withdraw it into your own wallet for safekeeping. When buying Bitcoin, make sure you’re buying the real thing! By buying Bitcoin on Coinmama, you’re purchasing your share of the finite, diminishing supply of REAL Bitcoin.

The Illusion Of The Pump

In a way, Bitcoin’s incredible rise has been something of an optical illusion. Yes, the price has shot up like crazy, especially since the start of the COVID pandemic. Gold and stocks have also hit all-time highs in the last year. But the epic spike in asset prices did not happen organically. One of the most powerful catalysts for the bull run we’ve been seeing is the dramatic influx of new cash into the market. Since COVID began, the Federal Reserve alone has printed $3 trillion in new money, bringing up the total dollar supply to a gigantic $7 trillion. This means that 40% of all dollars in existence were printed in the last year alone. Add in the ‎€1.27 trillion printed by the ECB and £300 billion printed by the Bank of England and you have a liquidity cocktail of historic proportions2. When you have so much new money chasing a limited supply of goods and services, the results almost always lead to inflation. But inflation does not have to hurt you. There’s a hatch you can open to escape this mess, and it’s called Bitcoin. Whether you’re a veteran buyer or even if this is your first time ever reading anything about Bitcoin, the time for Bitcoin is now!

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Disclaimer: The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.

1. Based on the Consumer Price Index data
2. M1 data from tradingeconomics.com