Bitcoin, as we all know, has benefited from macroeconomic uncertainty in 2016.
The first half of the year saw the devaluation of the Chinese yuan, which, in turn, caused the popular digital currency to surge by more than 50 percent in price. Then there’s the Brexit vote.
But as the excitement over these market drivers fade, speculations have started on whether future global events will further benefit the digital currency sector. Well, here’s something from Japan: Prime Minister Shinzo Abe announced on Wednesday that the government plans on implementing a stimulus package worth ¥28 trillion ($265 billion).
Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities, told Jiji Press the amount is “so large” that it will be “impossible to spend this much money in one extra budget.” Most likely, the amount will be spread out over several years, and will have a significant economic impact.
“The BOJ [Bank of Japan] is likely to ease policy, including increasing government debt purchases, so you could say the BOJ can absorb the new debt. It also makes it easier to show that the BOJ and the government are working together,” Miyazaki said, according to the report.
Inflated yen, surging bitcoin?
The sudden increase in government spending will likely trigger an inflationary effect, with the stimulus packages placing a negative pressure on yen’s buying power. If this happens, market participants will be encouraged to turn away from the Japanese yen in favor of safe haven assets, such as bitcoin.
Experts have been tirelessly advocating bitcoin as a safe haven asset, one that “benefits in times of macroeconomic uncertainty in which its strengths as an investment vehicle whose value is derived solely from a global market are best on display.
The yen is currently showing a strong surge, but Abe’s economic policy change could possibly rein in the price spike. And this, coupled with bitcoin’s inevitable rise, will propel the value of the digital currency upwards.
Current price and daily transaction volume
The price of bitcoin rose to $654.94 on Thursday, with a market capitalization of more than $10.35 billion.