In recent days, stimulus packages announced by western governments have been reported. Given this, most crypto influencers have commented that we will soon see a depreciation in currencies such as the dollar. However, will the dollar really come out of this crisis badly? Blockchain entrepreneur Vinny Lingham believes Coronavirus will strengthen the dollar in our Tweet of today.
The dollar is necessary against the Coronavirus
For a few days now, the world’s leading crypto influencers have been optimistic about the future of Bitcoin. Predicting that the incentive packages announced by the world’s main governments, abruptly increasing the liquidity of Fiat money, will lead to a scenario of inflation and monetary depreciation that will benefit Bitcoin.
This prediction seems logical at first. After all, the rampant increase in monetary liquidity is the first ingredient to unleash inflation. Since money, like any other good, loses value if its supply increases too much without its demand doing the same.
However, like all currencies, it has another point of view, being in this case the study from the point of view of demand. There is the key to understanding the reason why the dollar will not see its value depreciated. Well, the truth is that the US currency is today the main asset used in international trade and finance.
Therefore, in the face of the stimulus package that the European Union and the United States have prepared, and that will be announced soon by other countries in the world, the global demand for dollars will increase sharply. In fact, it may happen that the Coronavirus crisis, and its preventive measures, will strengthen the dollar.
Therefore, even in a scenario of uncontrolled issuance of dollars, the US currency could gain value. As Lingham comments, retweeting a New York Times article explaining this process in detail:
“Even if the US government prints 2 trillion dollars tomorrow, the dollar will probably strengthen.”
This analysis contradicts the most important analysts of the crypto market, and would also frustrate the main hope of the crypto community, in an increase in the price of Bitcoin due to the weakness of Fiat money. Presenting a future where the US dollar, instead of being weakened by the Coronavirus, will emerge stronger than ever.