Here's how US stimulus checks have contributed to Bitcoin price, according to the Cleveland Fed

The COVID-19 stimulus checks issued by the government led to a modest rise in the number of cryptocurrency purchases on exchanges. No significant impact on Bitcoin's price was noted. 

Stimulus checks affect Bitcoin demand and retail crypto trading volume

Now that checks that are part of President Joe Biden's $1.5 Trillion stimulus have started flowing again, crypto traders are waiting to see its impact on Bitcoin's price on exchanges. Cryptocurrency enthusiasts are viewing the "American Rescue Plan" as a rescue for Bitcoin prices, following a sharp drop noted this week.

The two previous rounds of stimulus were $1,200 and last winter's $600 stimulus checks. Putting money directly in the bank accounts of hundreds of thousands of American families meant that citizens affected by coronavirus could pay for food and utilities. It appears that some percentage of the recipients decided to spend their stimulus check dollars for buying Bitcoin and cryptocurrencies on exchanges. 

A surge in buy orders for the entire check, $1,200, was noted in April 2020. Brian Armstrong, the CEO of Coinbase, had tweeted about the percentage of buys/deposits that were the same size as the stimulus check. The tweet has since been deleted, and crypto traders are still waiting for a rise in Bitcoin demand on exchanges.

The latest research put forward by the Federal Reserve's Cleveland branch suggests that it is likely there may be no notable bump in Bitcoin prices. The study has revealed that the Economic Impacts Payment (EIP) program of April 2020 had a significant but modest impact on the BTC/USD trading pair. 

An increase of 3.8% was observed in the trade volume of BTC/USD on exchanges. Further, the trading volume surge represented only 0.02% of EIP dollars and most likely came from individuals without families at exchanges catering to nonprofessional investors. 

The research dubbed the EIP program a positive wealth shock for retail investors. It is important to note an effective increase in trade volume in the BTC/USD pair. However, no effect was observed on sell trades. 

Fed researchers noted a 0.07% permanent price increase and said their findings are "modest compared to the 4.6% standard deviation in Bitcoin's daily price swings." The research results are statistically significant and relevant to the current Bitcoin price action as the next round of stimulus checks have started flowing in. 

The findings are consistent in countries with similar COVID-related stimulus programs like Japan and South Korea. There was a significant increase in Bitcoin buys trades for amounts at or just below the modal stimulus check size once payouts begin. 

Fed researchers have stated that in the US, Japan, and South Korea, the increase in Bitcoin buy trades is driven by the direct stimulus payment programs in these countries and cannot be wholly explained by other factors.

The Harris Poll, an American market research and analytics company that conducted a poll in March 2021 researched the percentage of Americans who would spend their next stimulus check on cryptocurrencies. 53% of those who plan to invest money from the new stimulus check (17% of total survey respondents) chose to invest in cryptocurrencies. 

More crypto influencers and analysts have a bullish outlook for crypto and expect further rounds of stimulus checks that drive crypto asset prices higher. In his latest newsletter, Anthony Pompliano, founder and partner at Morgan Creek Digital, said,

History is not necessarily an indicator of the future, but it is hard to imagine a scenario where if we had a second wave of lockdowns, we wouldn't also get more aggressive monetary stimulus efforts. If that occurred, we would likely see all assets continue to go higher and higher.