Uncovering Retail Trading in Bitcoin: The Impact of COVID-19 Stimulus Checks

Published Online:https://doi.org/10.1287/mnsc.2023.4790

References

  • @BitcoinStimulus (2021) $1,200 stimulus is now worth. Twitter. Accessed November 26, 2021, https://twitter.com/BitcoinStimulus.Google Scholar
  • Akana T (2020) CFI COVID-19 survey of consumers: Wave 2 updates, impact by race/ethnicity, and early use of economic impact payments. Report, Consumer Finance Institute, Philadelphia.Google Scholar
  • Armantier O, Goldman L, Koşar G, Lu J, Pomerantz R, van der Klaauw W (2020) How have households used their stimulus payments and how would they spend the next? Liberty Street Economics, Federal Reserve Bank of New York, New York.Google Scholar
  • Auer R, Tercero-Lucas D (2021) Distrust or speculation? The socioeconomic drivers of US cryptocurrency investments. Working paper, Bank for International Settlements, Basel, Switzerland.Google Scholar
  • Bagwell LS, Bernheim BD (1996) Veblen effects in a theory of conspicuous consumption. Amer. Econom. Rev. 86(3):349–373.Google Scholar
  • Baker P (2020) Some US citizens look to be splashing their stimulus cash on cryptocurrency. Coindesk. Accessed November 26, 2021, https://www.coindesk.com/markets/2020/04/20/some-us-citizens-look-to-be-splashing-their-stimulus-cash-on-cryptocurrency/.Google Scholar
  • Baker SR, Farrokhnia RA, Meyer S, Pagel M, Yannelis C (2020) Income, liquidity, and the consumption response to the 2020 economic stimulus payments. NBER Working Paper No. 27097, National Bureau of Economic Research, Cambridge, MA.Google Scholar
  • Balutel D, Engert W, Henry C, Huynh K, Voia M (2022) Private digital cryptoassets as investment? Bitcoin ownership and use in Canada, 2016–2021. Staff Working Paper 2022-44, Bank of Canada, Ottawa.Google Scholar
  • Bauer L, Broady K, Edelberg W, O’Donnell J (2020) Ten facts about COVID-19 and the US economy. Report, Brookings, Washington, DC.Google Scholar
  • Belger T (2018) 91.5% of cryptocurrency investments made by men. Bridging & Commercial Magazine. Accessed November 26, 2021, https://www.bridgingandcommercial.co.uk/articledesc.php?id=13688.Google Scholar
  • Benetton M, Compiani G (2020) Investors’ beliefs and asset prices: A structural model of cryptocurrency demand. Working Paper 2020-107, Becker Friedman Institute, Chicago.Google Scholar
  • Biais B, Bisière C, Bouvard M, Casamatta C, Menkveld AJ (2023) Equilibrium Bitcoin pricing. J. Finance 78(2):967–1014.CrossrefGoogle Scholar
  • Binder CC (2017) Measuring uncertainty based on rounding: New method and application to inflation expectations. J. Monetary Econom. 90:1–12.CrossrefGoogle Scholar
  • Boutros M (2020) Evaluating the impact of economic impact payments. Preprint, submitted December 1, https://dx.doi.org/10.2139/ssrn.3742448.Google Scholar
  • Bradford T (2022) The cryptic nature of Black consumer cryptocurrency ownership. Payments System Research Briefing, Federal Reserve Bank of Kansas City, Kansas City, KC.Google Scholar
  • Braun OL, Wicklund RA (1989) Psychological antecedents of conspicuous consumption. J. Econom. Psych. 10(2):161–187.CrossrefGoogle Scholar
  • Butler DJ, Loomes GC (2007) Imprecision as an account of the preference reversal phenomenon. Amer. Econom. Rev. 97(1):277–297.CrossrefGoogle Scholar
  • Butler DJ, Loomes GC (2011) Imprecision as an account of violations of independence and betweenness. J. Econom. Behav. Organ. 80(3):511–522.CrossrefGoogle Scholar
  • Carlson R (2021) Coinbase vs. Robinhood for crypto: Which is best? Yahoo! Finance. Accessed November 26, 2021, https://finance.yahoo.com/news/coinbase-vs-robinhood-crypto-best-174515174.html.Google Scholar
  • Cattaneo MD, Idrobo N, Titiunik R (2019) A Practical Introduction to Regression Discontinuity Designs: Foundations (Cambridge University Press, Cambridge, UK).CrossrefGoogle Scholar
  • Chetty R, Friedman JN, Hendren N, Stepner M, Opportunity Insights Team (2020) How did COVID-19 and stabilization policies affect spending and employment? A new real-time economic tracker based on private sector data. NBER Working Paper No. 27431, National Bureau of Economic Research, Cambridge, MA.Google Scholar
  • Coibion O, Gorodnichenko Y, Weber M (2020) How did US consumers use their stimulus payments? NBER Working Paper No. 27693, National Bureau of Economic Research, Cambridge, MA.Google Scholar
  • Coibion O, Georgarakos D, Gorodnichenko Y, Kenny G, Weber M (2021) The effect of macroeconomic uncertainty on household spending. NBER Working Paper No. 28625, National Bureau of Economic Research, Cambridge, MA.Google Scholar
  • Coinmarketcap (2021) Accessed November 26, 2021, https://coinmarketcap.com/currencies/bitcoin/.Google Scholar
  • Congress (2020) Coronavirus Aid, Relief, and Economic Security Act or the CARES Act. S.3548, 116th Congress. Accessed November 26, 2021, https://www.congress.gov/bill/116th-congress/senate-bill/3548.Google Scholar
  • Cooney P, Shaefer HL (2021) Material hardship and mental health following the Covid-19 relief bill and American Rescue Plan Act. Policy Brief, University of Michigan, Ann Arbor, MI.Google Scholar
  • Cox N, Ganong P, Noel P, Vavra J, Wong A, Farrell D, Greig F, Deadman E (2020) Initial impacts of the pandemic on consumer behavior: Evidence from linked income, spending, and savings data. Brookings Papers Econom. Activity 35–82.CrossrefGoogle Scholar
  • Dantes D (2021) US Bitcoin exchanges see no major uptick in stimulus-related buying. Coindesk. Accessed November 26, 2021, https://www.coindesk.com/markets/2021/03/25/us-bitcoin-exchanges-see-no-major-uptick-in-stimulus-related-buying/.Google Scholar
  • English R, Tomova G, Levene J (2020) Cryptoasset consumer research. Research Note, Financial Conduct Authority, London.Google Scholar
  • Falcettoni E, Nygaard V (2021) Acts of congress and COVID-19: A literature review on the impact of increased unemployment insurance benefits and stimulus checks. FEDS Notes, Board of Governors of the Federal Reserve System, Washington, DC.Google Scholar
  • Falk G, Carter JA, Nicchitta IA, Nyhof EC, Romero PD (2021) Unemployment rates during the Covid-19 pandemic. Report, Congressional Research Service, Washington, DC.Google Scholar
  • Fuster A, Kaplan G, Zafar B (2020) What would you do with $500? Spending responses to gains, losses, news and loans. Rev. Econom. Stud. 88(4):1760–1795.CrossrefGoogle Scholar
  • Garner TI, Safir A, Schild J (2020) Receipt and use of stimulus payments in the time of the Covid-19 pandemic. Beyond the Numbers 9.10, 1–18.Google Scholar
  • Gitlin J (2018) 17% of Bitcoin owners trust the federal government. Can you trust Bitcoin? Curiosity at Work. Accessed November 26, 2021, https://www.surveymonkey.com/curiosity/17-of-bitcoin-owners-trust-the-federal-government-can-you-trust-bitcoin/.Google Scholar
  • Goncharov I, Ioannidou V, Schmalz MC (2023) (Why) do central banks care about their profits? J. Finance Forthcoming.CrossrefGoogle Scholar
  • Greenwood RM, Laarits T, Wurgler J (2022) Stock market stimulus. NBER Working Paper No. 29827, National Bureau of Economic Research, Cambridge, MA.Google Scholar
  • Griffin JM, Shams A (2020) Is Bitcoin really untethered? J. Finance 75(4):1913–1964.CrossrefGoogle Scholar
  • Hackethal A, Hanspal T, Lammer DM, Rink K (2022) The characteristics and portfolio behavior of Bitcoin investors: Evidence from indirect cryptocurrency investments. Rev. Finance 26(4):855–898.CrossrefGoogle Scholar
  • Hautsch N, Scheuch C, Voigt S (2018) Building trust takes time: Limits to arbitrage in blockchain-based markets. Working Paper No. 616, Center for Financial Studies, Frankfurt.Google Scholar
  • Hervé F, Schwienbacher A (2018) Round number bias in investment: Evidence from equity crowdfunding. Finance 39(1):71–105.CrossrefGoogle Scholar
  • Holtzblatt J, Karpman M (2020) Who did not get the economic impact payments by mid-to-late May, and why? Report, Urban Institute, Washington, DC.Google Scholar
  • Hu AS, Parlour CA, Rajan U (2019) Cryptocurrencies: Stylized facts on a new investible instrument. Financial Management 48(4):1049–1068.CrossrefGoogle Scholar
  • Ilk N, Shang G, Fan S, Zhao JL (2021) Stability of transaction fees in Bitcoin: A supply and demand perspective. Management Inform. Systems Quart. 45(2):563–592.CrossrefGoogle Scholar
  • Internal Revenue Service (2021) Economic impact payment information center. Accessed November 26, 2021, https://www.irs.gov/coronavirus/economic-impact-payments.Google Scholar
  • Iyer T (2022) Cryptic connections: Spillovers between crypto and equity markets. Global Financial Stability Notes. International Monetary Fund, Washington, DC.Google Scholar
  • Jermann UJ (2021) Cryptocurrencies and Cagan’s model of hyperinflation. J. Macroeconomics 69:103340.CrossrefGoogle Scholar
  • Karger E, Rajan A (2021) Heterogeneity in the marginal propensity to consume: Evidence from Covid-19 stimulus payments. Working Paper No. 2020-15, Federal Reserve Bank of Chicago, Chicago.Google Scholar
  • Khaw MW, Stevens L, Woodford M (2017) Discrete adjustment to a changing environment: Experimental evidence. J. Monetary Econom. 91:88–103.CrossrefGoogle Scholar
  • Kraken (2021) How leverage works in spot transactions on margin. Accessed November 26, 2021, https://support.kraken.com/hc/en-us/articles/203053116-How-leverage-works-in-spottransactions-on-margin.Google Scholar
  • Kuchler T, Stroebel J (2020) Social finance. NBER Working Paper No. 27973, National Bureau of Economic Research, Cambridge, MA.Google Scholar
  • Kumar A (2009) Who gambles in the stock market? J. Finance 64(4):1889–1933.CrossrefGoogle Scholar
  • Leibenstein H (1950) Bandwagon, snob, and Veblen effects in the theory of consumers’ demand. Quart. J. Econom. 64(2):183–207.CrossrefGoogle Scholar
  • Lillard L, Willis RJ (2001) Cognition and wealth: The importance of probabilistic thinking. Working paper, Michigan Retirement Research Center, Ann Arbor, MI.Google Scholar
  • Liu Y, Tsyvinski A, Wu X (2022) Common risk factors in cryptocurrency. J. Finance 77(2):1133–1177.Google Scholar
  • Makarov I, Schoar A (2020) Trading and arbitrage in cryptocurrency markets. J. Financial Econom. 135(2):293–319.CrossrefGoogle Scholar
  • Mandel BR (2009) Art as an investment and conspicuous consumption good. Amer. Econom. Rev. 99(4):1653–1663.CrossrefGoogle Scholar
  • Marr C, Cox K, Bryant K, Dean S, Caines R, Sherman A (2020) Aggressive state outreach can help reach the 12 million non-filers eligible for stimulus payments. Report, Center on Budget and Policy Priorities, Washington, DC.Google Scholar
  • Misra K, Singh V, Zhang Q (2022) Frontiers: Impact of stay-at-home-orders and cost-of-living on stimulus response: Evidence from the CARES Act. Marketing Sci. 41(2):211–229.Google Scholar
  • Mitchell J (2001) Clustering and psychological barriers: The importance of numbers. J. Futures Markets 21(5):395–428.CrossrefGoogle Scholar
  • Murphy D (2021) Economic impact payments: Uses, payment methods, and costs to recipients. Report, Brookings, Washington, DC. Google Scholar
  • Ozik G, Sadka R, Shen S (2021) Flattening the illiquidity curve: Retail trading during the COVID-19 lockdown. J. Financial Quant. Anal. 56(7):2356–2388.CrossrefGoogle Scholar
  • Papanikolaou D, Schmidt LDW (2022) Working remotely and the supply-side impact of COVID-19. Rev. Asset Pricing Stud. 12(1):53–111.CrossrefGoogle Scholar
  • Parker JA, Schild J, Erhard L, Johnson D (2022) Household spending responses to the economic impact payments of 2020: Evidence from the Consumer Expenditure Survey. NBER Working Paper No. 29648, National Bureau of Economic Research, Cambridge, MA.Google Scholar
  • Perez-Lopez D, Bee CA (2020) How are Americans using their stimulus payments? America Counts: Stories, U.S. Census Bureau, Washington, DC.Google Scholar
  • Rodriguez V (2021) CNBC-Momentive Poll: ‘Invest in you’ August 2021. Accessed November 26, 2021, https://www.surveymonkey.com/curiosity/cnbc-invest-in-you-august-2021/.Google Scholar
  • Self Financial (2020) Stimulus checks and how they’re being spent. Accessed November 26, 2021, https://www.self.inc/info/stimulus-check-survey/.Google Scholar
  • Shiller RJ (2019) Narrative Economics (Princeton University Press, Princeton, NJ).Google Scholar
  • Sozzi B (2021) Nearly 10% of the $380 billion in stimulus checks may be used to buy Bitcoin and stocks: Survey. Yahoo!Finance. Accessed April 22, 2023. https://money.yahoo.com/nearly-10-of-the-380-billion-in-stimulus-checks-may-be-used-to-buy-bitcoin-and-stocks-survey-131009531.html.Google Scholar
  • Telyukova IA (2013) Household need for liquidity and the credit card debt puzzle. Rev. Econom. Stud. 80(3):1148–1177.CrossrefGoogle Scholar
  • Thaler RH, Johnson EJ (1990) Gambling with the house money and trying to break even: The effects of prior outcomes on risky choice. Management Sci. 36(6):643–660.LinkGoogle Scholar
  • The Harris Poll (2021) Nearly 1 in 10 Americans have used stimulus checks to invest in crypto. Accessed November 26, 2021, https://theharrispoll.com/stimulus-check-spending/.Google Scholar
  • Tversky A, Thaler RH (1990) Anomalies: Preference reversals. J. Econom. Perspect. 4(2):201–211.CrossrefGoogle Scholar
  • u/DaleWright43456 (2020) Got my stimulus check and I already converted it to Bitcoin. Reddit. Accessed November 26, 2021, https://www.reddit.com/r/Bitcoin/comments/g22gsf/got_my_stimulus_check_and_i_already_converted_it.Google Scholar
  • Urquhart A (2017) Price clustering in Bitcoin. Econom. Lett. 159:145–148.CrossrefGoogle Scholar
  • U.S. Census Bureau (2021) American Community Survey data. Accessed November 26, 2021, https://www.census.gov/programs-surveys/acs/data.html.Google Scholar
  • Wurgler J, Zhuravskaya E (2002) Does arbitrage flatten demand curves for stocks? J. Bus. 75(4):583–608.CrossrefGoogle Scholar
INFORMS site uses cookies to store information on your computer. Some are essential to make our site work; Others help us improve the user experience. By using this site, you consent to the placement of these cookies. Please read our Privacy Statement to learn more.