U.S. cryptocurrency exchanges say they have started to see an increase in customers buying bitcoin (BTC) or other digital tokens with their $ 1,400 stimulus checks from the latest coronavirus relief and economic recovery plan by President Joe Biden.
But in the bitcoin market, the episode turned out to be a disappointment for some traders who speculated last month that a new wave of demand could help push prices to new highs.
“It would be very difficult to get a full picture of how that money went from Uncle Sam to bitcoin,” said Mati Greenspan, founder of Quantum Economics, a Tel Aviv-based market analysis firm, during an interview with CoinDesk.
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Biden signed the $ 1.9 trillion COVID-19 relief bill on March 11, and stimulus payments of $ 1,400 began soon after, many by direct deposit to beneficiaries’ bank accounts. .
Soon after, some cryptocurrency traders began to question whether some of this money could be used to buy bitcoin. Mizuho Securities, a Japanese brokerage firm, estimated that $ 40 billion in stimulus checks could be spent on bitcoin and stocks, according to a survey released on March 15.
As recently as last month, no cryptocurrency exchange reported a major increase in purchases of $ 1,400, based on an informal CoinDesk survey. Industry executives have warned it may be too early to judge.
Now, these purchases appear to be happening, some companies say, even though it isn’t the tsunami some Bitcoin bulls might have expected.
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“We have seen a significant number of deposits in the amount of the last individual stimulus check,” Steve Ehrlich, CEO of US cryptocurrency broker Voyager Digital, told CoinDesk in an email sent by a spokesperson.
Kraken, a San Francisco-based exchange, saw a “rise that could well come from US stimulus checks,” according to Thomas Perfumo, the company’s head of business operations and strategy.
But the rise in deposits of $ 1,400 “stimmy” was not enough to drive bitcoin higher.
Over the past month, BTC has struggled to decisively cross $ 60,000 amid slow trading activity. The slowdown in volume is typical of a consolidation phase in price action, deviating from the uptrend in BTC prices seen earlier in the year.
Traders might expect to accumulate BTC at lower support levels, especially given the nearly doubled price rise this year.
“We would expect weak BTC support from around $ 56,000 to $ 52,000, and stronger BTC support from $ 44,000 to $ 42,000,” wrote Justin Chuh, senior trader at Wave Financial, a digital asset investment fund. “BTC resistance remains at $ 60,000.”
Retail traders aren’t the only ones waiting; institutional demand is also slowing. “The drop in volume is more related to the drop in institutional volume, especially with the drop in volatility in futures markets,” said Hunter Merghart, head of US operations at Bitstamp, a Luxembourg-based cryptocurrency exchange. .
“We are seeing the arrival of new institutions from traditional financial circles, increasing deposits on the platform,” Merghart said. “They are ‘buy and hold’ customers, unlike accessory stores in 2017.”
Retail accounts make up around 80% of deposits on Bitstamp. The company has seen retail deposit growth of less than $ 2,000 over the past month when U.S. stimulus checks were issued, Merghart told CoinDesk in a telephone interview.
Robinhood, an online brokerage app, said on Thursday that 9.5 million clients traded cryptocurrency in the first three months of the year, up from 1.7 million in the fourth quarter of 2020.
There just wasn’t a lot of Bitcoin stimulus.
“I didn’t expect the stimulus to pump bitcoin,” said Greenspan, of Quantum Economics. “There are now much bigger players in the market.”