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Money Printer Keeps Rolling, But Do The Crypto Too?

Written by: Jure Vitulić, 30. 4. 2021
A deep dive into the connection between the new USA stimulus checks and the recent upticks in the cryptocurrency market.

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.

Chart showing cryptocurrency market exceeded $2 trillion for the first time
If you ever take your eyes off the graSo, if the markets are growing so fast, and the stimulus has come – one might wonder if this is an even bigger turning point for the cryptomarket?
Does it really matter?

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.

Bitcoin, Ethereum and Binance Coin trading volume

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.

Why the limited effect?

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?

And the future?
Now, should the lack of stimulus investments worry us? Of course not – the cryptocurrency market is not dependent on the retail traders, but as always in finance, “the whales” or largest companies on the market. And there are no signs that the market frenzy is about to be stopped, as more and more banks and investment funds know how big the bullrun could be. Who knows, it may not stop until “it reaches the moon”.
Elon Mush adds #Bitcoin to Twitter account
Tesla is only one of the latest whales to invest large sums into Bitcoin in February.

About the author:

Jure Vitulić

 

A young and enthusiastic cryptocurrency trader, with a strong desire to invest into the same products – young and optimistic. He pursues every opportunity to earn money, and knows that without taking any risks, you may end up at the bottom. He believes in the power of knowledge, and that if you work smart, you don’t need to WORK TO EARN money, but the MONEY WILL WORK for you. Apart from occasional daily rants about the non-believers, he is here to tell you everything you need/want to know about crypto and more.
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