On March 6, the House of Representatives approved US President Joe Biden’s economy-saving $1.9 trillion stimulus package. The announcement has had a colossal positive impact on cryptocurrency prices.

The measures foreseen in the package include a series of direct payments to American citizens in the amount of $1,400 per recipient, as well as support for local authorities and businesses.

The news of the approval of Biden’s package coincided with a positive reversal on the crypto market, which saw a slight correction on March 5.

Judging by the cryptocurrency market charts, the announcement has had a colossal positive impact on crypto prices. In just three days since the adoption of the stimulation package, ethereum (ETH) saw a price hike of over 28%, while bitcoin (BTC) demonstrated more modest growth of only 3%.

Given previous corrections and the reaction of crypto market assets on positive news backgrounds emanating from the US economy and lawmakers, it is important to review the reasons why ether reacted to the stimulus package in a stronger manner than bitcoin.

Such price movements, as based on analyses of similar price movements in the past, are evidence that current market dynamics are merely the beginning of explosive growth.

The end of March of 2020 saw Donald Trump distributing stimulus checks to the American population. The effects on the crypto market then were just as palpable as the bear market that had values reaching over 70% dips was largely reversed and turned into the bullish run being witnessed at present.

The positive market sentiment was continuing up to March 27, 2020, when a $2.2 trillion stimulus bill signed by the Trump administration was passed to aid Americans suffering financially, as a result of the coronavirus pandemic.

The effects then largely boosted the crypto market, as many of the families receiving aid spent their stimulus checks on investments. The borrow cycle started at the same time and, eventually, turned into the bullish market run reversal after the 70% negative correction.

Current market charts indicate that the correction has been largely achieved and an upward price movement has already begun, one similar to that witnessed during the issuance of the first stimulus package.

The latest stimulus plan was passed by the House of Representatives and the market has been showing a major dip as before. It could signify a repeat of its earlier phase that can result in an explosive rise in crypto prices.

One of the factors influencing such positive sentiment is the fact that recently many businesses have been investing in cryptocurrencies, including global corporations like Tesla.

The billionaires — like Elon Musk and other businesses that had invested just before the BTC surged above $55,000 — had most likely done so as part of long-term investment planning strategies and not shorting in mind.

Therefore, it is highly likely that they will wait for bitcoin to lock in their profits based on in-depth analysis of potential price forecasts. During the correction in February of 2021, the same investors may have even increased their crypto holdings in hopes of further price movements.

Recent news indicate that institutional purchases of large amounts of bitcoin are at the forefront as Tesla, MicroStrategy and other companies are injecting large amounts of fiat into the growing crypto.

However, at the same time, there are big deals on the decentralized finance (DeFi) market, which reflect why the price of ether is growing faster than bitcoin.

There are other major deals being signed on the DeFi market that are contributing to price growth. For example, the recent purchase of 15,000 ETH and 379 BTC on March 7 by Meitu, a Chinese company that makes a photo editing app.

Other deals include PayPal Holdings’ acquisition of Curv, a privately held digital asset security specialist based in Israel. Though the value of the deal is not being disclosed, experts say the transaction is to close by the end of June.

Other giants include MicroStrategy, which has over 90,000 BTC on its balance sheet, worth upwards of $4.9 billion, while Square owns more than 8,000 BTC.

The reason why the upcoming stimulus package might have a significant impact on the price of leading cryptocurrencies is because the Fed continues printing new dollars, which are to flow to citizens to keep up the beleaguered economy.

The DeFi market is becoming a major magnet for disposable funds available in the population. It is capable of solving the problems of money manipulation by the government and giving average people the chance to save on banking solutions and earn on passive income opportunities and trading.

The resulting situation seen on the price charts is highly reminiscent of that of April of last year. The trendline shows the fuller picture of a bullish market as the rejection has only recently been touched and the trendline may probably bring the market up to the numbers above $80,000.

The price reacted multiple times to various external stimuli on the given trendline, over the past year, which again may suggest that the trend is positive rather than negative.

Google Trends is showing a picture that is highly reminiscent of that of end of 2017, indicating that a dip may be attainable in the near future, followed by a sharp reversal based on market cycles.

Although there is still a chance of some market correction, it has failed to retest lower levels, which may be followed by a price explosion.

Considering such conditions, many companies will likely adopt a wait-and-see attitude and a small correction may be possible in order to carry out additional deals.

However, in general, there is a tendency on the part of large companies regarding the accumulation of large amounts of money. In addition, market movements are showing that none of the majors funds are intending to sell off their cryptocurrency assets.

Analysts are also noting that the cryptocurrency market is increasingly starting to acquire the behavior characteristic of the classic stock market on a large scale.

As stocks of companies like Amazon and Apple always move parabolically and historically, they have never fallen to zero. Major cryptocurrencies like bitcoin and ethereum, which are already matching some of these companies in capitalization, will unlikely fall to record lows.

This is especially true with ether which sees an increasing number of applications using its underlying technology.

The Ethereum network is acting as the basis for the rapidly growing DeFi market as a whole. It gives more than enough reasons to believe that in the near future it will continue to experience price growth in percentage terms higher than bitcoin.

The market is sending numerous signals to companies to start deciding where to invest. Some negative financial reports, coupled with the devaluation of fiat money, might also become a selling point for higher management to hedge their risks with decentralized assets and partake in the advent of a new era for the entire financial system.

The price movements exhibited by ethereum are direct consequences of the growing volume and capitalization of the DeFi sector. This gives both corporate and private investors food for thought as to whether they should start diversifying their portfolios with ETH, rather than betting solely on bitcoin.

The post Biden’s Stimulus Check to Push Crypto Market to New Highs appeared first on BeInCrypto.

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