Survey predicts US$40b flow into stocks from US relief checks

Another round of US stimulus checks could provide a shot in the arm for stocks and, especially, bitcoin, according to a survey released Monday by Mizuho Securities, MarketWatch reports.

The poll of 235 individuals who expect to receive checks courtesy of the latest round of relief signed into law by President Joe Biden found that two out of five recipients plan to invest at least some part of the proceeds into bitcoin and stocks. Based on the responses, around 10 percent of the total gross payments, or around US$40 billion of the US$380 billion in direct checks, could be allocated to the world’s most popular digital asset and stock purchases.

That’s in keeping with findings from other surveys and with a narrative that’s accompanied a surge in individual-investor activity over the course of the coronavirus disease pandemic. Analysts and economists have speculated that boredom induced by the lockdowns coupled with earlier stimulus payments and a lack of activities to spend them on have sparked a surge in the opening of online brokerage accounts as well as interest in so-called meme stocks like GameStop Corp and AMC Entertainment Holdings Inc.

When it comes to the current round of payments, a Deutsche Bank survey late last month also found investors ready to use the money for trading. In fact, that poll found investors even more eager to push money into the market, estimating approximately US$170 billion in potential stock-market inflows out of a then-estimated US$465 billion in direct payments.

Drilling down, the Mizuho survey found around 20 percent of check recipients expected to allocate20 percent of their checks to bitcoin and/or stocks, while 13 percent expected to allocate 20 percent to 80 percent, and 2 percent expected to put 80 percent or more into the markets.

And between bitcoin and equities, the the cryptocurrency was by far the more popular choice.

“Bitcoin is the preferred investment choice among check recipients. It comprises nearly 60 percent of the incremental spend, which may imply US$25 billion of incremental spend on bitcoin from stimulus checks,” wrote Mizuho analysts Dan Dolev and Ryan Coyne, in a Monday note (see chart). “This represents 2-3 percent of Bitcoin’s current US$1.1 trillion market cap.”