The US economic stimulus plan is about to be released. Can Bitcoin set a new high?

Funds from a new round of U.S. economic stimulus plans will begin to flow into bank accounts later this week, and earlier data shows that U.S. retail traders are preparing to invest billions of dollars in the Bitcoin market, accelerating the trading frenzy that has swept the cryptocurrency industry since last year.

Small investors are set to buy nearly $40 billion worth of cryptocurrencies in the coming days as part of U.S. President Joe Biden’s $1.9 trillion economic stimulus spending plan is put into the cryptocurrency space, according to a survey by Japanese bank Mizuho Financial Group .

Mizuho Bank analysts led by Dan Dolev surveyed 235 people with the highest incomes below $150,000.

Of those, 40% said they would use some of their stimulus money to invest in Bitcoin or stocks. The survey noted that $40 billion of the $380 billion stimulus package would be invested in the cryptocurrency market.

The survey also concluded that most retail investors would rather invest in Bitcoin than in stocks. Cryptocurrencies attracted 61% of the votes, while stocks attracted 39%, making it more likely that the market value of cryptocurrencies will increase by 2-3%.

Retail investors have played a huge role in the Bitcoin market explosion. As the new crown has made everyone spend more time at home and have more uninvested funds, cryptocurrencies have given investors a platform to trade freely .

Retail traders have caused even the most depressed stocks, like GameStop, to rise 100 percent in a single day. They have also allowed a nearly useless token, like Dogecoin, to achieve higher profits, beating some of the most promising cryptocurrencies. The flow of money from the last federal government has given retail traders the tools to exploit the market.

Meanwhile, Robinhood, an American free trading app that provides stock and Bitcoin trading services, has sent a communication to its customers saying that stimulus measures have been introduced.

Robinhood customers increased their investments by 7% following the previous $900 billion stimulus package, and with Biden's $1.9 trillion commitment, reserves on the platform are expected to continue to rise.

Piper Sandler analyst Richard Repetto told the Financial Times: "We believe that last year was a year of overgrowth, with the big growth in the market driven by retail. This year is not only a continuation of that momentum, but will go even further."

The Bitcoin market continues to hold onto its key technical support levels following a sharp correction from the recent record high of $61,788 (according to Coinbase).

As of Wednesday, the cryptocurrency's price remained above $55,000 as traders closely watched the Federal Reserve to determine whether they could respond to the recent rise in long-term Treasury yields.

The central bank's rate setters kick off a two-day policy meeting, with its chairman, Jay Powell, due to speak on Wednesday about their future decisions.

Rising yields have helped the dollar break out of a year-long bearish run, denting the appeal of safe-haven assets such as Bitcoin in the short term .

Easy monetary policy, progress in COVID-19 vaccinations and Biden's stimulus measures have helped drive the cryptocurrency's appreciation in recent months. But signs that the Federal Reserve sees rising inflation could undermine Bitcoin's gains and send investors turning to the dollar.

Numerous signs that the Fed is willing to respond to rising yields could see the central bank reallocate its $120 billion in monthly asset purchases toward longer-term Treasuries or expand its bond-buying program, leading to lower yields.

This, in turn, will help Bitcoin continue its uptrend towards new all-time highs.

The original text comes from bitcoinist and is compiled by Blockchain Knight. The English copyright belongs to the original author. Please contact the translator for Chinese reprint.