A new round of stimulus controls could be a shot in the arm for stocks and especially bitcoin, according to a study released Monday by Mizuho Securities.
The survey of 235 people who expect to receive checks thanks to the latest round of COVID-19 relief, signed by President Joe Biden, found that two out of five recipients plan to spend at least a portion of the proceeds in bitcoin and stocks. to invest. Based on the responses, about 10% of the total gross payments, or about $ 40 billion of the $ 380 billion in direct checks, could be allocated to the world’s most popular digital assets and stock purchases.
Read: ‘$ 1.9 Trillion Seems Fake, But $ 7,000 Seems Life-Changing’: 3 Americans Tell MarketWatch How To Spend Their Incentive Vouchers
That is in line with the findings of other studies and with a story that accompanied an increase in individual investor activity during the COVID-19 pandemic. Analysts and economists have speculated that the boredom caused by the lockdowns coupled with past stimulus payments and a lack of activity to spend them on has led to a surge in online brokerage account opening, as well as interest in so-called meme stocks such as GameStop Corp. GME,
and AMC Entertainment Holdings Inc. AMC,
See: Individual investors are back – this is what it means for the stock market
When it comes to the current round of payments, a Deutsche Bank study late last month also found investors were willing to use the money to trade. In fact, that poll found investors were even more eager to push money into the market, estimated at about $ 170 billion in potential stock market inflows on a then estimated $ 465 billion in direct payments.
Checking out: Another wave of intrepid private investors could be willing to pour $ 170 billion in shares, Deutsche Bank says
Mizuho’s survey found that about 20% of check recipients expected to allocate 20% of their checks to bitcoin and / or stocks, while 13% expected to allocate 20% to 80% and 2% expected to allocate 80% to point out. % or more in the markets.
And between bitcoin and stocks, cryptocurrency was by far the most popular choice.
Mizuho Effects
“Bitcoin is the preferred investment among check recipients. It comprises nearly 60% of incremental spending, which could mean $ 25 billion in incremental spending on bitcoin from stimulus checks, ”Mizuho analysts Dan Dolev and Ryan Coyne wrote in a Monday note (see chart above). “This represents 2-3% of Bitcoin’s current $ 1.1 trillion market cap.”
Some Americans may have already received their money. The first batches of payments, which came in in direct deposits, were due to bills over the weekend. Paper checks and preloaded debit cards will start arriving in the coming weeks, according to officials from the IRS and the Treasury Department. The IRS said it would not load the third round of payment on debit cards a person received in the first two rounds.
See: When will you receive your $ 1,400 stimulus check? Some payments have already come in, but many will hit Wednesday
It’s all because bitcoin is showing its signature volatility, retreating Monday after moving past the $ 60,000 milestone for the first time over the weekend. In recent transactions, bitcoin BTCUSD,
decreased by more than 6% to 56,337.
In contrast, stocks were largely lower after the Dow Jones Industrial Average DJIA,
S&P 500 SPX,
and the small-cap Russell 2000 RUT,
set record finishes on Friday. Investors continue to monitor bond yields. The return on the 10-year note TMUBMUSD10Y,
has risen for six consecutive weeks, leading to a rotation from previously high-flying large-cap growth stocks to stocks that are more sensitive to the economic cycle.
Also read: “There will be no peace” until the return on 10-year Treasury hits 2%, says strategist