"It's exactly why bitcoin (BTC) was created," Michael Novogratz, CEO of the cryptocurrency-focused investment firm Galaxy Digital, told CNBC last week. 

It's a common refrain heard these days from bitcoin bulls: The U.S. dollar and other currencies will eventually be debased by the injections of trillions of dollars of coronavirus-related aid and monetary stimulus by governments and central banks. That should, theoretically, strengthen the case for bitcoin, the oldest and largest cryptocurrency, as a hedge against inflation. 

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Such predictions might eventually come true, but for now bitcoin investors are stuck in a holding pattern: The cryptocurrency pushed above $7,000 on Monday, but for the past couple weeks it has struggled to hold that level, which it hasn't reliably traded above since early March. 

"A nice recovery from the lows leaves investors hopeful," cryptocurrency analysis firm Arcane Research wrote Friday in a report. "However, this is not yet reflected in the market sentiment."

Any inflation stemming from fiscal and monetary stimulus could take a while to appear – partly because of higher unemployment and a drop-off in economic demand could relieve upward pressure on consumer prices in the near term. In the U.S. alone, roughly 10 million new unemployment claims were filed during the last two full weeks of March, and JPMorgan economists predict that a report this week will reveal another seven million claims were filed last week. Bank of America says the lack of an effective policy response to control the spread of the virus will push 2020 global growth to a contraction of 2.7 percent, instead of an expansion of 0.3 percent. 

Nic Carter, a partner at Castle Island Ventures and co-founder of the blockchain analytics startup CoinMetrics, wrote last week for CoinDesk that the devaluation of money "does not happen immediately, but over time."  

The 2008 financial crisis prompted the Federal Reserve to double total assets in a matter of weeks, and then doubled the size of the balance sheet again to more than $4 trillion over the next few years. But it took the money supply, as measured by M2, more than 12 years to double, at least partly because of low demand for loans in the years after the crisis. 

The bitcoin market's tepid reaction thus far to the Federal Reserve's announcement of essentially unbounded quantitative easing might disappoint some bitcoiners who are looking for a faster pump. 

Sylvain Saurel, author of the blog In Bitcoin We Trust, wrote last week that a separate move by U.S. regulators to reduce bank reserve requirements could lead to new money creation "ad infinitum." 

"This unprecedented currency devaluation in such a short period of time has been decided by the Federal Reserve in a totally arbitrary manner," Saurel wrote. His conclusion, essentially, was that people should buy bitcoin. 

Jay Hao, CEO of the Malta-based cryptocurrency exchange OKEx, wrote last week in a blog post that "more proactive measures" would be needed beyond "QE infinity." Those could include a new "super-sovereign currency" to address trade and economic imbalances created by the U.S. dollar's dominant role in global finance.  

"At present, bitcoin possesses the characteristics of a super-sovereign currency," Hao wrote. 

The investment narrative that bitcoin is a "harder" currency than U.S. dollars and is getting additional traction from next month's "halving" on the bitcoin blockchain – the once-every-four-years occurrence by which the pace of issuance of new units of the cryptocurrency gets cut in half.

Traders are expected to get a chance this week to observe how prices of two bitcoin-offshoot cryptocurrencies, Bitcoin SV (BSV) and Bitcoin Cash (BCH), perform as they go through their own quadrennial halvings. 

Some analysts said last month that bitcoin was trading in sync with U.S. stocks. That was seen as a sign that some investors were selling the cryptocurrency as part of an indiscriminate flight to safety – into dollars.

Olga Feldmeier, CEO of the digital-asset exchange Smart Valor and a self-described "outright bitcoin maximalist," says bitcoin's price plunge earlier this year undercuts hopes that the cryptocurrency would serve as a safe-haven asset in times of market turmoil. She instead recommended "tokenized gold" – digital tokens like the Pax Gold (PAXG) – that offer a crypto-friendly way of investing in the yellow metal, long seen as a reliable inflation hedge. 

Kraken, a San Francisco-based cryptocurrency exchange, noted in an April 4 blog post that the volume of PAXG trading on its platform surged to $13 million in March, a six-fold increase from February levels. 

"Kraken clients appear to see PAXG as a safe haven of late since it is backed by gold, which typically acts as a safe haven amidst economic uncertainty," according to the post.  

But there are some indications that bitcoin might be trading more like gold in recent weeks. VanEck, a money-management firm that offers a bitcoin trust to qualified institutional buyers, says bitcoin's price correlation with gold jumped to 0.47 during the last couple weeks of March, from an average 0.03 over the past eight years. (A correlation of 1 implies perfect synchronicity.)

The next couple months could prove pivotal for bitcoin as the U.S. suffers the worst stretch of the pandemic's health crisis and moves into the economic-recovery phase. Nancy Pelosi, speaker of the U.S. House of Representatives, told CNBC last week the recently passed $2 trillion aid package would not be enough. Treasury Secretary Steven Mnuchin said he would ask Congress for more money if a $350 billion pool for small businesses runs out. 

"More bazookas needed," executives for the Wall Street dealer Jefferies wrote Friday in an open letter to clients and colleagues. 

Is bitcoin the real digital gold? With more financial "bazookas" getting hoisted into position, cryptocurrency markets will serve as the proving ground. 

"Many Bitcoin advocates think it will prove to be a better long-term store of value than gold," according to the Kraken blog post. "Only time will tell." 

Editor's caveat: No idea if this $20 "Bitcoin Logo V2 Neck Gaiter Face Mask" is real. If so the free publicity here does NOT represent an endorsement. It seems like a high price for a mostly polyester bandana. But it certainly is a sign of the times.

Bitcoin is again looking to establish a strong foothold above $7,000, having tested dip demand with a pullback to $6,600 over the weekend. The cryptocurrency printed a high above $7,100 early Monday and is currently changing hands around $7,090.

The bulls have repeatedly failed to keep gains above the $7,000 mark over the last three weeks, forcing investors to question the sustainability of recovery rally from the March 19 low of $3,867.

Even so, the bias remains bullish, as a pennant breakout confirmed April 2 is still intact. As a result, the cryptocurrency remains on the hunt for a test of the descending 50-day average, currently at $7,522.

If the upside break of $7,000 resistance again proves to be short-lived, the immediate bullish outlook would be neutralized. The bias would turn bearish if prices fall below support at the weekend low of $6,610.

That would open the doors to the higher low of $5,856 created March 30.