The US Senate rejected the new stimulus proposal on September 10, which did not include a new round of checks for $ 1,200. However, This increases the likelihood that a new proposal with individual checks will be approved and could serve as a catalyst for Bitcoin (BTC).
Why was the stimulus proposal rejected and why could it be a good thing?
The new proposal, dubbed the “thin” stimulus package, was rejected by 52-47 votes in the Senate. Republican Senator Rand Paul, along with Senate Democrats, blocked the new package, which did not include $ 300 billion in stimulus checks.
Both Republicans and Democrats have teamed up for a new round of direct stimulus controls in recent months. When a bill was passed without the support of small businesses and individual checks, the Senate rejected it.
There is a high chance the Senate will pass a bill that includes direct payments by the end of the month. Had the bill passed without direct payments, it would not have had much of an impact on stocks that Bitcoin has been closely correlated with since the March crash.
In May, data aggregation company Envestnet Yodlee found that many Americans were using their stimulus controls to invest in stocks. At the time, Yodlee President Bill Parsons stated:
“There is a clear correlation between Covid and people who are getting involved again for their money.”
Brian Armstrong, the CEO of Coinbase, also shared data suggesting that people were buying Bitcoin with their checks.
The percentage of Bitcoin deposits made on Coinbase worth $ 1,200. Source: Brian Armstrong
The deposit percentage of USD 1,200 rose almost four times significantly from 0.1% to 0.4% after April.
However, if a revised package with individual checks is approved in the future, this could put renewed buying pressure on the exchange and the price of Bitcoin.
Bill Hoagland, executive director of the bipartisan Policy Center, said the Senate could consider a new proposal by the end of September. He said:
“If FEMA runs out of money, it will even cut the $ 300 that is available now. That could be the only spark I see that inspires both Republicans and Democrats to do something, maybe before the end of the month. “
Economists say direct controls are essential
Because of its effectiveness, economists are putting pressure on the government to introduce another round of direct payments.
Natalie Foster, co-chair of the Economic Security Project, said direct payments are the fastest way to provide financial assistance. Foster told CNBC:
“Direct controls are the fastest, most effective way to support American families. We have received a payment of USD 1,200 in the past six months, which is not enough. “
The Senate is unlikely to pass a proposal unless it includes individual checks and a small business package.
For tech stocks and the price of Bitcoin, the Senate pushing for additional direct payments could become a bullish catalyst.