Uncovering Retail Trading in Bitcoin: The Impact of
COVID-19 Stimulus Checks
Anantha Divakaruni & Peter Zimmerman
Management Science, forthcoming
https://pubsonline.informs.org/doi/abs/10.1287/mnsc.2023.4790
Abstract:
In April 2020, the U.S. government sent economic impact payments (EIPs) directly to households as part of its measures to address the COVID-19 pandemic. We characterize these stimulus checks as a wealth shock for households and examine their effect on retail trading in Bitcoin. We find a significant increase in Bitcoin buy trades of size $1,200, which is the modal EIP amount. We find similar increases in trading for other countries that paid out stimulus checks. We estimate that the EIPs have a significant impact on the U.S. dollar-Bitcoin trading pair, increasing buy volume by 3.8% and the price by 0.6%. We also find that demand for Bitcoin is highly price inelastic compared with the demand for stocks. We suggest the demographic characteristics that make people more resilient to the COVID-19 economic shock -- single, computer literate, and educated -- are also characteristics of people who are more interested in Bitcoin.
Anantha Divakaruni & Peter Zimmerman
Management Science, forthcoming
https://pubsonline.informs.org/doi/abs/10.1287/mnsc.2023.4790
Abstract:
In April 2020, the U.S. government sent economic impact payments (EIPs) directly to households as part of its measures to address the COVID-19 pandemic. We characterize these stimulus checks as a wealth shock for households and examine their effect on retail trading in Bitcoin. We find a significant increase in Bitcoin buy trades of size $1,200, which is the modal EIP amount. We find similar increases in trading for other countries that paid out stimulus checks. We estimate that the EIPs have a significant impact on the U.S. dollar-Bitcoin trading pair, increasing buy volume by 3.8% and the price by 0.6%. We also find that demand for Bitcoin is highly price inelastic compared with the demand for stocks. We suggest the demographic characteristics that make people more resilient to the COVID-19 economic shock -- single, computer literate, and educated -- are also characteristics of people who are more interested in Bitcoin.
Related:
Crypto’s Quiet Gains: Ownership Climbs Despite
Crash in Prices
https://www.wsj.com/articles/cryptos-quiet-gains-ownership-climbs-despite-crash-in-prices-af76cdd6
https://www.wsj.com/articles/cryptos-quiet-gains-ownership-climbs-despite-crash-in-prices-af76cdd6