Bitcoin’s price hit a new all-time high above $37,000 on Wednesday after the Democrats picked up two Senate seats in Georgia’s runoff elections. Shares of MicroStrategy (NASDAQ:MSTR) and Grayscale Bitcoin Trust (OTC:GBTC) also rose sharply, closing the trading day up 12.1% and 11.5%, respectively.
Georgia’s elections effectively gave the Democrats control of the Senate. Combined with their majority in the House of Representatives, the Democrats and President-elect Joe Biden now have a greater ability to implement stimulus measures.
While this stimulus could help the economy recover and ease the financial burdens for many Americans, it’s also likely to come at a cost. To pay for the stimulus program, the U.S. government will likely need to print more money. That, in turn, could eventually lead to inflation and a decline in the value of the dollar.
Many people are turning 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 the value of cryptocurrency will rise as fiat currencies like the dollar decline in value when their supply increases.
MicroStrategy CEO Michael Saylor is one of these investors. In August, MicroStrategy began using bitcoin as its primary treasury reserve asset. Since then, the business intelligence company has purchased 70,470 bitcoins, which are now valued at more than $2.6 billion. Its stock now tends to track bitcoin’s price movements. It rose sharply along with the cryptocurrency today.
Grayscale Bitcoin Trust tracks bitcoin’s price movements even more closely. The trust holds approximately 0.001 bitcoin for every one of its shares. Its stock price, when multiplied by 1,000, theoretically should approximate the price of one bitcoin, though Grayscale Bitcoin Trust tends to trade at a hefty premium to its underlying cryptocurrency holdings.
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