US retail traders are gearing up to put billions of dollars into the bitcoin market when stimulus payments begin entering bank accounts later this week, adding more speed to a trading frenzy that swept the cryptocurrency industry last year.
The Mizuho analysts, led by Dan Dolev, surveyed 235 people with a maximum income of $150,000 or less, with 40 percent responding that they would utilize a portion of their stimulus money to invest in bitcoin or stocks. Mizuho noted that that would roughly bring about $40 billion into the cryptocurrency market, out of the total $380 billion in stimulus checks.
The survey also concluded that most retail investors would rather put money in bitcoin than in stocks. The cryptocurrency attracted 61 percent yay votes versus 39 percent for equities, raising its likelihood to swell its market capitalization by an additional 2-3 percent.
MORE FUNDS INCOMING
Their presence has ensured that even the most bearish stock like GameStop rallies by hundreds of percent in a single day. Similarly, an almost useless token like Dogecoin gets to beat some of the most bullish cryptocurrencies by logging higher sessional profits. The flow of money from the previous government has given these traders the tools to play the markets.
“We thought that last year was an over-the-top year, with the big increase in the market being driven by retail,” Richard Repetto, an analyst at Piper Sandler, told FT. “This year is not just a continuation of that momentum; it’s a step up.”
BITCOIN HOLDS SUPPORT
The Bitcoin market continues to hold onto its crucial technical support areas, having corrected sharply from its recently-established record high of $61,788 (data from Coinbase).
Rising yields have helped to take the US dollar out of its yearlong bearish slumber.
Conversely, any indications show the Fed’s willingness to address the rising yields could have the central bank reallocate its $120bn monthly asset purchase program to long-dated Treasuries. Or, it could expand its bond-buying program altogether, thus leading the yields lower.
In turn, that would help Bitcoin continue its uptrend—towards a new all-time high.