The second stimulus check that allegedly got bitcoin moving in a northward direction hasn’t arrived yet. For many, the idea of a second stimulus check likely meant more bitcoin in their pockets, but according to bitcoin analyst of Quantum Economics Jason Deane, using stimulus money to buy more crypto could wind up being a rather disastrous decision.
Deane: Stimulus Money Shouldn’t Be Used to Purchase Crypto
News of a second stimulus check has been meandering throughout the headline space over the past few months. Initially, the story got bitcoin moving back up into bullish territory all over again. Sadly, what we’ve seen is not money in our mailboxes, but rather members of Congress moving back and forth on the issue of stimulating the economy. There’s been a lot of talk as of late, but little to no action.
As we likely remember, many people who received an initial stimulus used the money they received to purchase further bitcoin and crypto and really build up their stashes. Many exchanges such as Coinbase reported purchases of around $1,200 during the months of April and May, around the times that these checks were showing up in the mail for many Americans.
This time, however, it appears following the same pattern would spell doom in America. Deane explained in a recent interview:
The bottom line is that bitcoin is simply not ready for something like this. The network is the most secure in the world, but it is nowhere near ready to handle the transaction level that would be required to operate properly on a global scale, and too few people currently use and work with it.
It’s interesting that he brings this up now that bitcoin has entered more of a bearish phase. As of late, the world’s number one digital currency by market cap has lost roughly $2,000 from its price in the past few weeks, dropping from around $12,000 to just slightly over $10,000. Could the previous stimulus purchases from four months ago have had anything to do with this?
A Major Problem Waiting to Happen
Deane believes that a sudden influx of new users and high transaction levels could potentially bring the world of crypto to its knees, which as of late, have been rather feeble. He states:
The net result of a mass buying of bitcoin at a rate faster than the underlying infrastructure is growing and developing could actually be a disaster not just for economies, but for bitcoin and all cryptocurrencies.
However, he did comment that should bitcoin be given enough time, it could ultimately serve as a powerful store of value. He’s also confident that in the coming future, bitcoin will have what it takes to serve as a global currency, though for the time being, the currency must learn to stick within its circle if it’s going to survive and succeed.