The coronavirus relief funds, issued by the US government, reached lower or middle-income Americans last week. They appear to use so-called stimulus checks on buying cryptos.
Despite the fact that Bitcoin (BTC) sharply declined last month due to the global coronavirus pandemic, the general public has not lost its interest in the best known digital currency, says Forbes report.
On the contrary, amidst the global recession and economic uncertainty, possibly the number of Americans are using their $1.200 stimulus checks for purchasing cryptocurrencies.
More crypto transactions worth of $1.200
Coinbase CEO Brian Armstrong tweeted a graph of user activity on the cryptocurrency exchange that indicated more transactions of exactly $1,200 were done last week.
A similar tendency was also spotted by its rival Binance US, when a cryptocurrency exchange witnessed a spike in $1.200 deposits during the previous seven days.
Meanwhile, surveys done by Twitter users, revealed that over 30% of respondents are determined to spend all coronavirus stimulus cash to buy Bitcoin.
Will you spend any of your $1,200 check to buy crypto?— Alex Svanevik 🧭 (@ASvanevik) April 15, 2020
The logic behind the spending stimulus checks
While for some users stimulus cash might be just free money to invest, others seem to have solid arguments for their choice. And one of them is the fear of the US dollar devaluation.
Since the federal government confirmed a $2 trillion stimulus package and the Treasury Department started printing paper money checks, the debt-based spending became a threat, that might lead to a possible weakening of the US national currency.
While users are willing to buy Bitcoin with stimulus money, the price of Bitcoin crossed the $7.000 limit last week.
To be honest, price volatility might be another key argument of why turn to cryptocurrencies. For example, after reaching a high of over $10,000 in the middle of February, the Bitcoin price fell below $4.000 a month later. Since then, the price has recovered to almost half its value. With such sharp fluctuations, Bitcoin and other cryptocurrencies are attractive assets for short-term investors.
Furthermore, the spurt of exchanging stimulus money into Bitcoin might be related to its upcoming halving event. The process when the number of new Bitcoins is cut in half is happening on May 13th and it usually marks the bullish trend.