Last week, Coinbase CEO, Brian Armstrong implied that Americans were using their stimulus checks to buy crypto. His reasoning centered around a spike in deposits of exactly $1,200, at around the time of first-wave stimulus payments.
However, for many reasons, this logic is flawed. As such, this data alone is not evidence of a government-funded mass inflow of capital into the crypto markets.
— Brian Armstrong (@brian_armstrong) April 16, 2020
The US Government is Struggling to Administer Check Payments
As part of the $2.2 trillion stimulus package aimed at helping Americans during this difficult period, the US Treasury finally made direct deposits on Thursday of last week.
This first wave payment covers 80 million Americans, but already, reports of mistakes highlight a system buckling under the pressure.
Congressman Thomas Massie was one of the first to raise concerns. He stated that a friend had contacted him saying his father, who died in 2018, had received a $1,200 stimulus payment. Others have also come out to share similar stories.
What’s more, such cases only add to the uncertainty surrounding how well the US government is handling the situation. To which crypto investing is likely the last thing on the minds of many Americans.
The Reality of the Economic Situation Doesn’t Support Stimulus Checks Spent on Crypto Investment
Nonetheless, of more pressing concern is how Americans will spend their stimulus money. After all, the thinking behind stimulus checks is to encourage spending and therefore the flow of money around the economy.
But Sarah Newcomb, Director of Behavioral Science at Morningstar states, given the fear of the pandemic situation, Americans will be cautious of spending frivolously. This puts paid to the idea of stimulus check fueled investment into risky crypto assets.
Moreover, Newcomb also makes a distinction between expected windfalls and unexpected windfalls. She states that expected windfalls tend to get spent on…