Millions of Americans are set to receive a new stimulus check as part of a $1.9 trillion coronavirus relief bill signed by President Joe Biden last week.
Ahead of the latest stimulus check hitting bank accounts, survey results have shown around 10% of funds—nearly $40 billion of the $380 billion in direct stimulus check deposits—may be used to buy bitcoin and stocks, with stimulus check recipients found to prefer bitcoin.
“We surveyed over 200 individuals who expect to receive the third round of stimulus checks this week,” wrote Dan Dolev, managing director at Mizuho Securities, which carried out the research. Mizuho polled 235 people with less than $150,000 of household income. “The survey reveals that two out of every five [stimulus check] recipients expect to invest some portion of their checks in bitcoin and stocks.”
Bitcoin was found to be the preferred investment choice among stimulus check recipients, comprising nearly 60% of the incremental spend. The survey results suggest as much as $25 billion from stimulus checks may be used to buy bitcoin—with $15 billion set to go toward stocks and shares. Just over one in ten people (13%) said they planned to use between 20% and 80% of their stimulus check to invest in the stock market or bitcoin, while 2% expect to allocate 80% or more.
Analysis by Mizuho found stimulus check investment into bitcoin “could add as much as 2% to 3% to bitcoin’s current $1.1 trillion market value.”
The bitcoin price has soared by 1,000% over the last year, climbing along with the stock market as governments around the world flood financial systems with freshly-printed cash in order to prop up economies ravaged by coronavirus-induced shutdowns. Bitcoin surged to over $60,000 last week after starting 2021 at around $30,000, spurred on by a combination of Wall Street institutional adoption, corporate interest from the likes of Tesla chief executive Elon Musk, and retail traders piling into the market.
Analysis shows that if people had used their first stimulus check of $1,200, distributed from April last year, to buy bitcoin it would now be worth a little over $10,000.
However, bitcoin’s highly volatile nature—which often sees it ricochet double-digit percentage points in mere minutes—means that those in the cryptocurrency community have cautioned people against investing more than they can afford to lose.
“If you need to pay rent or have credit cards that are maxed out, you should not buy bitcoin with your stimulus check,” Alex Mashinsky, the chief executive of New York-based cryptocurrency rewards platform Celsius Network, said in emailed comments.
“I think bitcoin can be a part of a diversified portfolio understanding that, like with any investment, there is risk,” Hunter Merghart, head of U.S. operations at Luxembourg-based bitcoin and cryptocurrency exchange Bitstamp, said via email.
“I view bitcoin, still, as a venture bet more than anything else, and with that any investors need to understand that volatility is likely to be higher, but the potential for returns to look also like venture returns.”