Money Printer Keeps Rolling, But Do The Crypto Too?
If you ever take your eyes off the graphs and live prices of your favourite cryptocurrencies, you might have noticed that Joe Biden’s administration and the House of Representatives have recently proposed the third stimulus package from USA’s Federal Reserves in the past year. On March 24th, they handed out 1.9 trillion $ and the checks have been the largest of the three, at a maximum of 1,400$ per person.
But, even if the national debt is thus growing and growing, and the debt clock numbers are getting redder and redder every second, both the NASDAQ 100 and S&P 500 have reached the highest points ever. Cryptocurrency market cap, the largest improver of the three in the last year, is currently also at its highest point ever, having reached 2 trillion $ market cap in the past week.
So, did people spend any money on cryptocurrencies yet? And does the »money printing« help the crypto market at all?
Well, the first impressions say there was no massive uptick in the market as of now. Even if there was hope for an initial push, especially for Bitcoin and Ethereum to reach the new all-time highs (which they eventually did), there is no actual evidence that the most recent rise was in any way connected to the stimulus checks.
If we take a look at the volume graphs of the largest three cryptocurrencies that are currently on the market from 24th of March onwards (the day when stimulus checks were firstly issued), we can see that the checks didn’t matter for the largest three coins.
The charts all show an upward trend the price has been on in the past three months. But, the volume of trading has stayed the same, or even below the initial level. These statistics show that even if crypto is getting up, the effect of smaller retail investors was not as positive as expected, especially for the largest three cryptocurrencies.
Well, if the first two checks happened in the uprise of the crypto market, the financial experts predicted that the third would also bring the good news for the investors. But why has it not happened and why did the market not react?
The first issue with the third stimulus and the crypto markets, was to whom the money was given. The people that received the maximum 1400$, have salaries up to 75,000 dollars per year on average and the research from ktnv.com has shown that only 19% wanted to save the money received or invest it.
But the stimulus money being spent or not, has not actually been a major factor in the crypto markets even before the third one. Retail traders are contemplating only a low percentage of the overall market cap (if the whole stimulus package were to be spent, it would still be less than the market cap is worth right now). There is, however, another swing with more and more larger companies investing a small part of their portfolios into cryptocurrencies, especially in Bitcoin and Ethereum. It might also be an indirect effect of printing money and enlarging the national debt – it might bring inflation, so there is more value in investing. And where better to invest than in crypto right now?
About the author: