$1,200 US Stimulus Check Is Now Worth Over $10,180.58 If Invested In Bitcoin
It has been roughly seven months since the US government sent the first stimulus checks worth $1,200 to many citizens. $1,200 US Stimulus Check Is Now Worth Almost $10,180.58 If Invested In Bitcoin
Interestingly, that amount would now be worth nearly $10,180.58 if invested in Bitcoin as the asset price has significantly appreciated since then, unlike the dollar.
Stimulus Checks: The History
World governments were caught by surprise when the COVID-19 pandemic broke out earlier this year. One of the first orders of business included seizing regular life as we knew it. Nation-wide lockdowns started occurring globally. The streets became empty as people remained in their houses.
It’s still debatable if these extreme measures had a real positive impact on the spread of the virus months later. However, one certain thing is that it had real consequences on many people’s jobs, and, naturally, their finances.
Most powerful economies responded by issuing so-called stimulus packages. They operate as tax rebates and incentives to prevent financial crisis while providing much-needed cash to struggling citizens.
The world’s largest country by nominal GDP led the charge with massive package deals worth trillions of dollars.
Every adult making below $75,000 a year in the US was entitled to a check worth $1,200. The first such checks were mailed out in mid-April.
$1,200 In BTC In April Worth Nearly $4,000 Today
Although most reports at the time indicated that people were using their recently obtained dollars for food and rent, it’s compelling to check what would have happened if they were actually invested in bitcoin. After all, the largest US-based crypto exchange Coinbase saw a substantial uptick of deposits worth precisely $1,200 during that time.
The ever-creative cryptocurrency community established a Twitter profile following how is the hypothetical investment in BTC performing. It tracks how much the $1,200 would have been worth if that money was put into bitcoin on April 15th.
At the time, the primary cryptocurrency was trading between $6,600 and $6,800. So, if someone had indeed swapped $1,200 for BTC at $6,600, he would have ended up with a little over 0.18 bitcoins. Today, the asset trades around $19,000. As such, that same amount of 0.18 bitcoins would be worth north of $3,4200. This would mean an ROI of 162% in just seven months.
What About USD?
It’s also worth exploring what has happened with the dollar since then. While BTC has skyrocketed in value, the world’s reserve currency actually declined compared to other fiat.
The dollar traded around 0.920 against the euro in mid-April, which was close to the yearly high. It has lost 8% since then and is down to 0.845.
The USD has also lost over 6% against the British Pound and the Chinese Yuan. Prominent US economist Peter Schiff predicted an even worse future for the dollar, saying that even hyperinflation is not entirely out of the picture.
On the other hand, Gemini co-founder Tyler Winklevoss believes that the aforementioned stimulus packages will continue to harm the USD and noted that they are a “code to buy Bitcoin.”
Novogratz Predicts Young People Will Buy Bitcoin With Their Stimulus Checks
Mike Novogratz claims that many people bought Bitcoin after the last round of federal stimulus checks and thinks they’re likely to again.
Amid a long battle over whether or not United States citizens will get their $2,000 stimulus checks to help them to weather the economic repercussions of the COVID-19 pandemic, Mike Novogratz has weighed in on what the news could mean for the stock and crypto markets.
The CEO of Galaxy Digital spoke to CNBC’s Squawk Box amid the surreal image of a Wall Street apparently unfazed by the commotion in the Capitol yesterday. As a Fox News caption had it in real-time yesterday, “Markets rally as protestors disrupt electoral college vote.”
A further round of stimulus checks at $2,000 each, recently approved by the House of Representatives, could, from Novogratz’s perspective, be further good news for the markets. With the Senate now flipped after the runoff election in Georgia, he noted that:
“A lot of that [stimulus] will find it’s way into the markets. Certainly, when it comes into young people’s hands, they’re going right to their Robinhood accounts. One of the most unique things last time was seeing how many people bought Bitcoin with the exact amount of stimulus. Boom, boom.”
“The market’s sensing all that,” Novogratz added. While many working Americans continue to struggle through the economic turbulence and job precarity exacerbated during the 2020 crisis, he pointed to the bullish sentiment among traders of all stripes:
“There’s speculative excess all over the place, when you look at the amount of options buying in stocks like Tesla, it’s to the point of insanity.”
This disconnect is likely to, however, spell trouble at some point — even for those cashing in on the crisis. “You’ve got to watch for the cracks. One day we’ll wake up, and markets will be reversing, and then they’ll reverse hard. I just don’t know when that is,” he said.
Earlier this week, Novogratz attributed Bitcoin’s unprecedented price highs to institutions moving in, pointing to PayPal’s servicing of Bitcoin as well as action from big U.S. insurers. As of press time, the coin is trading at close to $38,000, up almost 8.6% on the day.
As Biden Preps $3T Stimulus, Bitcoin Could Be Set To Erupt
Biden’s fiscal stimulus plan could send the BTC price rocketing higher.
The incoming Biden administration’s plan to flood the U.S. economy with trillions of dollars could ignite the next leg of the Bitcoin (BTC) bull market, as more investors seek refuge from a crumbling United States dollar.
Axios, an Arlington-based news outlet, reported Thursday that Joe Biden has asked Congress to provide Americans with $2,000 in stimulus payments to help offset the economic devastation of Covid-19. The incoming president has also proposed a $3 trillion tax and infrastructure package as part of his “Build Back Better” program.
Biden doubled down on his call for more direct relief to Americans following Friday’s disappointing jobs report showing a loss of 140,000 positions in December.
“Economic research confirms that with conditions like the crisis today, especially with such low interest rates, taking immediate action – even with deficit financing – is going to help the economy”
If 2020 is anything to go by, the new tidal wave of stimulus could be another catalyst for Bitcoin as more money floods the market and makes its way into asset prices.
Even Donald Trump, a Republican, was no stranger to vast government outlays. Under his leadership, the United States passed a historic $2 trillion stimulus bill in March. Trump also signed a $900 billion relief package last month that would pave the way for $600 stimulus checks.
The federal government’s inflation-boosting policies have coincided with record intervention from the Federal Reserve, which deployed trillions of dollars in 2020 to combat a liquidity crisis and keep overnight rates under control.
Although these policies provided a strong backstop for risk-on assets – a category that has included Bitcoin in the past – the emerging narrative surrounding BTC is that it’s a hedge against inflation.
This is not only corroborated by Bitcoin’s historic outperformance over the past 11 years but also by the fresh wave of institutional money entering the market. Institutions are buying Bitcoin with a clear purpose, and may one day become the industry’s “mega HODLers.”
Bitcoin’s digital gold narrative has been one of the biggest catalysts behind the institutional shift towards BTC. This narrative helped fuel Bitcoin’s 300% rally in 2020 and its more than doubling in price over the past three weeks. This trend could intensify in 2021 as the dollar’s purchasing power continues to erode.
Even JPMorgan Chase has acknowledged that Bitcoin is taking market share from gold, the traditional haven asset. On Friday, one Bitcoin was worth more than 22 ounces of gold, which represents a new all-time high.
Saved Stimulus Checks Expected To Help Spur Economic Recovery
Many households have boosted savings during the pandemic and pent-up demand is expected to propel growth.
Many U.S. consumers are starting 2021 flush with savings likely to help fuel the economic recovery this year.
The latest federal Covid-19 aid package sent $600 checks to many households that also received relief money last year, while more affluent households have built up pools of cash by curbing their spending during the pandemic.
Americans saved $1.4 trillion in the first three quarters of 2020, or about twice as much as in the same period of the prior year, according to analysis by Berenberg Economics. That amount is equivalent to nearly 10% of 2019 household spending, estimates Berenberg’s chief economist, Holger Schmieding.
“In this unusual recession, governments have been unusually generous, people have not been able to spend the money, and hence they have the money and will to spend,” Mr. Schmieding said. Once business restrictions are lifted and people feel it is safe to go out again, “there will be a lot of spending—my guess is the beaches will be crowded, the pubs will be crowded” and, “by May and June it will be in full swing,” he said.
President Biden is calling for a new $1.9 trillion Covid-19 relief package to help Americans weather the economic shock of the pandemic. His plan, which so far is meeting resistance from Republicans, includes $1,400-per-person direct payments to most households and a $400 weekly unemployment insurance supplement through September.
An analysis by the Federal Reserve Bank of New York found that consumers socked away more than a third of the first stimulus checks, which were sent to households as part of the $2 trillion Cares Act enacted last March. Just under a third of the stimulus payment, 29%, got spent, while 36% was saved and 35% used to pay down debt. The survey also found that consumers expected to spend an even smaller share of future stimulus payments, and use a higher share to pay down debts.
Marcus Prouty said he put his first $1,200 stimulus check into savings because he was “slightly terrified about what might happen” after he lost his job as a cook in March. Mr. Prouty, 25 years old, a student in Boise, Idaho, spent the aid over subsequent months. He has been receiving unemployment benefits and hopes to find a new job this spring when he expects businesses will start rehiring.
“I saved up enough money where I could buy needed stuff,” like a new laptop, “but most of my money goes to food and rent,” he said. He put his recent $600 stimulus check into savings and—barring an unexpected emergency—hopes to spend it on a vacation in California once he gets a Covid-19 vaccine.
The economic downturn caused by the Covid-19 pandemic is different from a typical recession that leaves consumers low on funds and businesses cautious to rehire as demand recovers slowly. Job losses have been severe in some sectors, particularly in services industries like bars and restaurants. But once vaccines are distributed more widely and demand for services picks up, economists expect employers in high-turnover sectors like bars and restaurants to rehire quickly.
Demand for services like haircuts, movie tickets, hotel stays and elective medical procedures was hammered by the pandemic, and spending on services remains below pre-pandemic levels. With nonessential businesses closed or operating at limited capacity in many regions, consumers haven’t been able to spend their money as freely as before—and many have been saving it instead.
The personal-saving rate, the portion of after-tax income that U.S. consumers sock away, was 12.9% in November, according to the Commerce Department. That compares with a saving rate of 7.5% in November 2019, before the pandemic hit.
James Sweeney, chief economist at Credit Suisse, says the 2021 economic outlook brightened considerably after Congress approved the second round of stimulus payments in late December. “The household sector of the U.S. looks to be in good financial shape,” he said.
Economists expect a pickup in spending to push inflation somewhat higher this year, but said Federal Reserve officials wouldn’t worry about that after years of weak price pressures.
Gregory Daco, Oxford Economics’ chief U.S. economist, said the Fed “would welcome even more signs that increased activity is leading to moderate inflation pressures in line or above” its 2% inflation target.
Lower-income households are more likely to spend their checks straight away. Consumers with less than $100 in their bank accounts spent over 40% of their stimulus payments within the first month, while individuals with more than $4,000 in their accounts barely spent a dime, according to a recent study published by the National Bureau of Economic Research.
Saving hasn’t been an option for Wendy Hartigan, 65, of Philadelphia, who describes the government aid as “the only thing keeping me from being on the street.” She lost her job at a day care facility when it shut down in March. She started collecting unemployment benefits then and received her first $1,200 stimulus payment. Her $600 check came in early January.
“It’s tough, it’s not nearly enough, it comes into my account and goes out the next day, I haven’t been able to save any of it,” said Ms. Hartigan, who used the checks for bills, groceries and to pay for the room in the residential hotel where she now lives.
Ms. Hartigan has an event-planning business focused mostly on weddings, but the pandemic has shut down much of the industry. Two weddings she was set to plan last year have been postponed.
“This year’s still up in the air, brides are still afraid,” she said. “I’m really stuck, I’m stuck between a rock and a hard place.”
Top Democrats Seek To Narrow Check Eligibility: Stimulus Update
Top Democrats are considering ways to reduce the number of households that qualify for $1,400 stimulus checks. The House passed a budget Wednesday evening that smooths the path for fast-track passage of President Joe Biden’s $1.9 trillion Covid-19 relief plan.
The House vote followed action by the Senate on Tuesday to consider a similar budget resolution — beginning a process that would let Democrats proceed with the Biden stimulus without Republican votes. Still, the president told reporters before an Oval Office meeting with Democratic senators that he thought some Republicans would support his package.
Senate Majority Leader Chuck Schumer said Tuesday that the legislative process the Democrats are using, known as reconciliation, is open to GOP participation and that the stimulus bill can still be tweaked with their input. But he said Democrats won’t risk moving slowly or timidly in trying to strengthen the economy.
Democrats Look At Options On $1,400 Payments (7:37 P.M.)
Congressional Democrats are looking at ways to reduce the number of households that would receive $1,400 stimulus checks, including lowering the income thresholds to qualify for the maximum payments, according to two people familiar with the talks.
One idea under consideration is to set the income thresholds for the payments at $50,000 for single adults and $100,000 for married couples, one person said. The payments would phase out for incomes above that.
The two previous rounds of checks went to single people earning $75,000 or couples making $150,000 and were phased out above those limits. The threshold levels have yet to be decided, the people said.
The effort to reduce the scope of the stimulus payments come as Republicans say that Biden’s $1.9 trillion stimulus package is too large. Researchers at the U.S. Census Bureau and Harvard University have also found that higher income households are more likely to save the payments, dampening any economic boost they might bring.
Ten Senate Republicans — the number needed to pass a bipartisan bill — released a counteroffer earlier this week that would cut the payments to $1,000 per adult and cap payments at $40,000 for singles or twice that for couples.
The Democrats are also considering other ways to reduce the payments’ overall cost. One way is to change the phase-out formula so that the payments are completely eliminated at a lower income level. Democrats could also reduce the amount paid to dependents. The Biden plan would give $1,400 to both child and adult dependents, but the Republican plan calls for $500 payments for those groups. — Laura Davison and Erik Wasson
House Passes Budget To Set Up Stimulus Fast Track (6:03 P.M.)
The House passed a fiscal 2021 budget resolution on a 218 to 212 vote, easing the path for passing legislation based on Biden’s $1.9 trillion stimulus plan with just Democratic votes.
The Senate plans to follow suit, passing an identical version of the budget later this week; the upper chamber on Tuesday voted along party lines to begin debate on that budget resolution.
Congressional committees will then have until Feb. 16 to craft a bill according to instructions in the budget and the House could vote on it as soon as Feb. 23. That bill will be able to pass the Senate with just 50 votes plus a vice presidential tie-breaker, rather than the usual 60 votes that would require Republican cooperation.
“We have the plan and the ability to do this. And, thankfully, we can also afford to do it. Interest rates and inflation are at historic lows — lower today than even before the pandemic — and the return on smart investments in the economy have never been higher,” House Budget Committee Chairman John Yarmuth, a Kentucky Democrat, said on the House floor.
Energy and Commerce Committee Chairman Frank Pallone of New Jersey said there is a lot of work left to draft the details of the bill over the next two weeks but he expects it to end up hewing closely to what Biden proposed. — Erik Wasson
Yellen Meets With Mayors To Boost Stimulus (1:13 P.M.)
Treasury Secretary Janet Yellen held a bipartisan discussion with six mayors — from cities including Little Rock, Arkansas and Arlington, Texas — in an effort to build support for passage of Biden’s proposed stimulus plan.
During the virtual conversation, Yellen highlighted the proposal’s $350 billion for state and local government funding, saying the money would help cover the cost of distributing coronavirus vaccines and reopening schools, the Treasury Department said in a statement.
She also argued the merits of aid for small businesses and a child tax credit for families, according to the statement. “Secretary Yellen reiterated that a major lesson of the last recession was that the federal government didn’t provide enough aid to states and localities resulting in sharp cuts in crucial things like infrastructure and education,” according to the statement.
Other mayors on the call included those representing Scranton, Pennsylvania; Providence, Rhode Island; Mesa, Arizona; and Boise, Idaho. — Saleha Mohsin
Most Stimulus Funds Would Go To Savings, Penn Analysis Finds (9:13 A.M.)
Nearly three-fourths of the relief-check money proposed in President Joe Biden’s stimulus plan would be saved rather than spent this year, according to an analysis Wednesday from University of Pennsylvania researchers.
The Penn Wharton Budget Model initiative analyzed a variety of data, including previous estimates of spending and government figures on consumption and savings from 2019 to the third quarter of 2020 — a period that includes the initial recessionary shock from the coronavirus and the bounce-back in spending following government stimulus.
The proposed $1,400 relief checks “will flow largely into household savings and will produce only small stimulative effects,” the report said. “Sectors affected by the pandemic still face restrictions and are unlikely to grow from stimulus payments.”
The researchers also said that even after the pandemic ends and Americans can resume normal activities, they aren’t likely to accelerate spending beyond the pre-recession period.
The findings underscore some of the criticism that Biden’s stimulus plan has faced mainly from Republicans, who balk at the cost and size. It also highlights the challenges of predicting outcomes in the pandemic-induced recession that continues to keep people at home.
A separate report from the Penn researchers said that those in the bottom half of incomes are more likely to spend, a finding similar to other research. The bottom 80% of income earners would receive the majority of the benefits from checks and other direct support, including child tax credits, the analysis showed.
Don’t Spend Your Covid-19 Stimulus Check. Invest It In Bitcoin
The government wants you to boost the economy. But boost your own bank account first.
It looks like congressional Democrats and the White House will get those $1,400 stimulus checks out the door in the next few weeks. Economists and the government are hoping you spend 100% of that money immediately to boost the economy.
A booming economy would be a good thing, but that doesn’t mean you should spend your whole check. Instead, consider this a once-in-a-lifetime chance to chip away at your debt, pay off high-interest credit cards or start building your savings.
Having more cash on hand will be a good thing. Many people, according to the Fed, can’t even find $400 if they need it. When people don’t have emergency funds, their lives can spiral out of control. People in debt find themselves more likely to ask family and friends for loans and gifts, which can strain relationships.
Without a cushion, people become more likely to draw down their retirement savings, use credit cards or payday loans, pawn or sell possessions, and take on extra jobs. No wonder people in debt are more unhappy and stressed. Saving some of your stimulus check may be able to save you from these negative effects.
The power of compounding interest is astounding — let that be a saving and anti-debt motivator. If you put $1,000 away now, forget about it, and earn 5% per year on it, you will have over $1,200 on the next inauguration day in 2025. That might not sound like much, but you didn’t sacrifice anything to get it.
And if you seed your account with $1,000 and save just $83 per month, you’ll have over $5,700. In contrast, if you go on a stimulus-check spending spree and add debt to a credit card with a 17% interest rate, you will be over $7,700 in the red.
Putting the money toward retirement would also be a good idea. If you’re 35 and put $1,000 in a retirement account and each year add $1,000 more, you will have about $74,000 when you are 65. If you wait until you’re 55, you will have to put $37,000 in an account and save $1,000 yearly to get to the same amount.
When you are young, time is on your side. If you save, say, 5% of your pay in your 20s and 30s, you might not even notice; if you wait until your 40s, you will have to save two to three times that much just to get to the same place.
In this round of Covid-19 relief, Congress reduced eligibility for the stimulus checks over concerns of “too much saving.” (In the proposal, married couples earning up to $100,000 in annual income, or individuals earning $50,000, are eligible.) Last spring, households spent only a portion of their checks on things like groceries and regular bills during the first 10 days after receiving their checks.
During the summer, a study found that households had spent just 40% of their stimulus money. But people in the 17% of households who live paycheck to paycheck — which we can roughly cut off at two-earner households with an income of $100,000 — spent 68% of their stimulus checks. These are the very people who also report that they’d have trouble coming up with $400.
This explains why some policy makers were hesitant to send out more checks. What good is a government check that goes unspent? The White House is hoping to spur a spending spree. While the macro effects from spending would be good for the economy, the effect on your individual household — not to mention your head and heart — might be negative.
Economists, including me, are watching closely what you and over 200 million Americans will do with your stimulus checks. I, for one, hope you’ll consider emerging from the pandemic more debt-free and saving-conscious. If we’ve learned one thing from the past 12 months, we don’t know what’s coming. So it’s best to be prepared.
Democrats’ Plan Offers $1,400 Stimulus Checks At Same Income Levels As Previous Rounds
Proposal heads for Ways and Means Committee vote this week with income cutoffs starting at $75,000 and $150,000.
House Democrats released the biggest piece of their coronavirus relief bill late Monday, offering a measure that would extend a $400-a-week unemployment insurance payment through Aug. 29 and send $1,400 per-person payments to most households without lowering the income thresholds from earlier rounds.
Democrats have been debating whether to reduce those income levels, but the version headed for a Ways and Means Committee vote this week gives the full amounts to individuals with incomes up to $75,000 and married couples with incomes up to $150,000. The legislation also expands the child tax credit, broadens child-care assistance and bolsters tax credits for health insurance.
It will be combined with pieces advancing through other House committees with the aim of getting through the full House later this month. Together, the measures make up President Biden’s $1.9 trillion aid plan, which Democrats are trying to push quickly through Congress.
“Our nation is struggling, the virus is still not contained, and the American people are counting on Congress to meet this moment with bold, immediate action,” said Rep. Richard Neal (D., Mass.), the committee chairman whose panel will begin considering the bill on Wednesday.
Other sections of the relief plan will provide $130 billion in funding for K-12 schools, $40 billion for colleges and universities and $39 billion for child-care providers. Mr. Biden has also proposed offering funds for vaccine distribution, unemployment programs and state and local governments, among other measures.
The legislation will also incorporate a minimum-wage increase to $15 an hour, though some Democrats, including Mr. Biden, have questioned whether it would be possible to pass in the final legislation.
There are some changes from the president’s framework: The unemployment insurance extension goes through Aug. 29 instead of the end of September. And it doesn’t include provisions that Democrats have discussed that would tie further aid to economic conditions instead of set dates.
Portions of the bill began to emerge on Monday, with House committees expected to release and mark up their sections of the legislation over the course of the week.
One of the largest pieces is the $1,400 payments, which are similar to the $1,200 checks issued after the March economic-relief law and the $600 payments issued after December’s law.
This round of payments would total $422 billion.
There are some key differences, however. This time around, children and adult dependents would be eligible for the full $1,400. Those adult dependents, including disabled adults and college students, haven’t been previously eligible.
A married couple with two children under 17 would get as much as $5,600, compared with $3,400 from the first round of payments and $2,400 in the second round. A single parent with a college student would get up to $2,800, compared with $1,200 from the first round and $600 in the second round.
Compared with previous versions, the payments phase out faster as incomes rise, responding to lawmakers’ concerns about higher-income households possibly getting money. According to a committee summary, individual payments go to zero once individual income reaches $100,000 and married couples’ payments go to zero when income hits $200,000.
Sen. Joe Manchin (D., W.Va.), a centrist Democrat whose support will be key to passing the legislation, had called for the payments to begin phasing down at $50,000 for individuals and $100,000 for couples. He said Monday that he would study the House bill. “I’m going to look at it, as long as we’re targeting to people that really need it,” he said.
Democrats from more expensive areas praised the move. “Working families in high-cost regions like the Bay Area are counting on the next round of economic impact payments and should not be left behind,” said Rep. Anna Eshoo (D., Calif.), who worked with Ways and Means member Mike Thompson (D., Calif.) to keep the $75,000 and $150,000 levels.
The payments would be based on 2019 or 2020 incomes, so households who want the Internal Revenue Service to use their 2020 information because their income declined that year have an incentive to file their tax returns quickly before the payments go out.
They could also get supplemental payments this year after they file their 2020 returns.
People who don’t get the full payments they are owed using 2021 information would be able to claim the rest on their 2021 tax returns early next year. As before, the payments aren’t taxable, and people generally don’t have to repay money they receive even if their income rises beyond the eligibility range.
Democrats are proceeding with a legislative tool called reconciliation, which allows them to pass the relief plan without Republican support in the Senate. But that process constrains what policy provisions lawmakers can pass, possibly endangering the $15 minimum-wage increase for which progressives have pushed.
“Our focus should be on crushing the virus and rebuilding our economy,” said Rep. Kevin Brady of Texas, the top Republican on the Ways and Means Committee. “Unfortunately, the bill placed before us at this late hour doesn’t fit that effort.”
The legislation also includes a significant increase in the child tax credit for 2021 only, offering $3,000 per child instead of $2,000, and $3,600 for children under age 6. In addition, parents of 17-year-olds would be eligible. The credit would be fully refundable, which means households can get the full benefit even if they have no income or owe no income taxes.
The full expanded credit would be available to individuals making up to $75,000 and married couples making up to $150,000. Households making above those amounts wouldn’t lose any of the $2,000-per-child credit that already exists.
The credit expansion is a down payment on Democrats’ antipoverty plans, and many lawmakers in the party want to make a near-universal child allowance a permanent part of the tax system. The IRS would begin making monthly payments of the expanded child tax credit as early as July, giving families their money for the 2021 tax year well ahead of the tax-filing season that starts in January 2022. Families would be able to opt out of the monthly payments.
Mr. Neal’s plan would also expand the earned-income tax credit, the wage subsidy for low-income workers. In particular, it would boost the amounts available to childless workers in 2021. Tax credits for paid leave and for pandemic-affected employers that retain their workers would also get extended.
He would also expand the tax credit for child and dependent care, taking the maximum credit to 50% of expenses, so that a family with one child can get up to $4,000 and a family with two children could get $8,000. More low-income and middle-income households would get the full amounts, while high-income households would no longer benefit.
That credit would start phasing out right at $400,000 of income. High-income households could benefit from another dependent-care provision, which would more than double the maximum set aside in a tax-preferred flexible spending account to $10,500 for 2021.
Mr. Neal didn’t include a provision progressives wanted that would have clawed back business tax breaks Congress approved last year. And he didn’t propose adjusting the cap on the state and local tax deduction.
He did propose repealing a corporate-tax provision that gives U.S.-based multinationals flexibility in how they treat their interest expenses, raising $22 billion over a decade. The proposal would also increase tax credits to people who buy Affordable Care Act health plans in 2021 and 2022 to reduce their premiums.
The proposal also extends a federal program that provides unemployment benefits to people who exhaust their state-level benefits. The program, which is currently set to expire in mid-March, would last through the end of August.
Nearly $40B In US Stimulus Checks May Be Spent On Bitcoin And Stocks
The survey by Mizuho Securities estimates that 10% of the $380 billion to be issued as checks could be used to invest.
Nearly $40 billion of the latest round of direct stimulus checks could be spent on bitcoin (BTC, -5.65%) and stocks, according to a new survey.
* The research by Mizuho Securities estimates that, of the $380 billion total, close to 10% could be used to purchase the two asset types, Yahoo Finance reported Monday.
* Nearly two in five of Americans expecting to receive checks in the coming days anticipated using a portion of them to invest, the company found.
* Bitcoin is expected to account for 60% of the total invested, which could add add as much as 3% to the cryptocurrency’s market value, according to Mizuho Securities Managing Director Dan Dolev.
* Dolev cited a number of crypto-adjacent companies that he believes will benefit investors most should they wish to invest in equities: Visa, Mastercard, PayPal and Square.
* The survey polled roughly 235 Americans with less than $150,000 in household income, of which around 200 expected to receive payments from the latest round of stimulus.
* The $1.9 trillion COVID-19 relief package recently signed into law by President Joe Biden would see eligible Americans receive checks for $1,400.
Bitcoin Worth The Risk For Stimulus Check Recipients Despite Pressing Needs: Poll
The next round of stimulus check recipients will prioritize basic needs, but a sizable portion still intends to either save or invest.
Most Americans who expect to receive the next round of relief bill stimulus checks will use the money to buy necessities and pay off debts, but some are still willing to invest in cryptocurrencies like Bitcoin (BTC), a new poll reveals.
A study conducted by Harris Poll on behalf of Yahoo Finance showed that 15% of people who received the last two rounds of stimulus checks directed some or all of the money towards investments. Of that group, around half invested in cryptocurrencies like Bitcoin and Ether (ETH) specifically.
The trend is expected to continue when the first of the latest stimulus checks are sent out at the end of March, according to the poll results. The number of recipients who plan to invest some of their checks increases to 17% this time, while the overall number of crypto buyers remains fairly stable, at 41% of the would-be investor group.
Paying for basic necessities like rent, groceries and medicine was the foremost concern for poll respondents, 62% of whom said they needed the funds to cover the cost of essential needs.
A sizable segment were still able to save some of the money received from the first stimulus check (36%) and the second (33%), and the latest responses show that figure is expected to increase to 40% when the third check is issued.
A willingness to experiment financially with the COVID-19 stimulus funds is found more readily in high-income households. Among respondents from households earning more than $100,000 per year, 10% invested in cryptocurrencies using their first stimulus check, and 13% with their second. That figure is expected to rise to 14% this time around. Comparatively, just 3% of households making less than $50,000 per year were able or willing to invest in cryptocurrencies.
The survey was conducted among 1,052 U.S. adults in an online setting, which naturally skews the data. Another recent survey, from a much smaller sample size, suggested that around 10% of the $400 billion issued to individuals in the next round of stimulus checks could make its way into Bitcoin.
Consumers Increasingly Saving Stimulus Checks, New York Fed Says
U.S. consumers are socking away 42 cents of every dollar received from the third round of pandemic stimulus checks sent out in March, according to a new poll by the Federal Reserve Bank of New York.
Less than 25% of the funds are being spent and the remainder is being used to pay down debts, according to the New York Fed survey data, published Wednesday.
Eligible adults and children began receiving the $1,400 stimulus checks last month under the American Rescue Plan Act.
Households surveyed received $3,162 on average, the New York Fed said. Respondents reported 13% of the funds were expected to be spent on essential items on average, and 8% on nonessential items.
In the earlier rounds of stimulus, households spent a greater amount of the funds to meet daily living expenses, according to the New York Fed survey.
Some 29% of funds disbursed via the initial round of checks last spring under the Coronavirus Aid, Relief, and Economic Security Act were spent, versus about 26% of the disbursements authorized by the Coronavirus Response and Relief Supplemental Appropriations Act in December.
The findings show the divergent needs facing households, with many continuing to face a high degree of uncertainty as evictions are largely on hold and mortgage holders are receiving loan forbearance.
Unemployment levels remain high, but of those that remain working, the added stimulus is largely going toward improving their balance sheets. The household savings rate remains highly elevated instead of consumption, and households have been paying credit card bills in record fashion.
No ‘Stimmy’ Rally: Why The $1,400 Checks Brought So Little Bitcoin Stimulus
Slowing bitcoin volume suggests retail traders are less active with their “stimmy” checks compared to 2020.
U.S. cryptocurrency exchanges say they’ve begun to see an uptick in customers buying bitcoin (BTC) or other digital tokens with their $1,400 stimulus checks from President Joe Biden’s latest coronavirus-relief and economic recovery plan.
But in the bitcoin market, the episode has proven to be a disappointment to some traders who were speculating last month that a new wave of demand might help push prices to fresh highs.
“It would be very difficult to get a full picture of how that money moved from Uncle Sam into bitcoin,” said Mati Greenspan, founder of Quantum Economics, a market analysis firm based in Tel Aviv, during an interview with CoinDesk.
Biden signed the $1.9 trillion COVID-19 relief bill into law on March 11, and the $1,400 stimulus payments started going out soon afterward, many of them via direct deposit into recipients’ bank accounts.
Soon afterward, some cryptocurrency traders began to speculate whether some of that money might be used to buy bitcoin.
Mizuho Securities, a Japanese brokerage firm, estimated that $40 billion of stimulus checks could be spent on bitcoin and stocks, according to a survey published on March 15.
As recently as late last month, no cryptocurrency exchanges reported any major bump in $1,400 purchases, based on an informal survey by CoinDesk. Industry executives cautioned that it might be too early to judge.
Now, those purchases do appear to be happening, according to some firms, even if they’re not the tsunami that some bitcoin bulls might have expected.
“We have seen a significant number of deposits in the amount of the latest individual stimulus check,” Steve Ehrlich, CEO of U.S. cryptocurrency brokerage Voyager Digital, told CoinDesk in an email sent by a spokesperson.
Kraken, a San Francisco-based exchange, has seen an “uptick that may well stem from U.S. stimulus checks,” according to Thomas Perfumo, the company’s head of business operations and strategy.
But the rise in $1,400 “stimmy” deposits hasn’t been enough to bid up bitcoin.
Over the past month, BTC has struggled to decisively break above $60,000 amid slugglish trading activity. Slowing volume is typical of a consolidation phase in price action, diverging from the BTC price uptrend seen earlier in the year.
Traders could be waiting to accumulate BTC at lower support levels, especially given the near two-fold price increase this year.
“We expect weak BTC support around $56,000 down to $52,000, and stronger BTC support starting at $44,000 down to $42,000,” wrote Justin Chuh, senior trader at Wave Financial, a digital asset investment fund. “BTC resistance remains at $60,000.”
Retail traders aren’t the only ones on standby; institutional demand is also slowing. “The drop-off in volume has been more related to institutional volume going down, especially with the decline in futures market volatility,” said Hunter Merghart, head of U.S. operations at Bitstamp, a cryptocurrency exchange based in Luxembourg.
“We’re seeing new institutions coming on board from traditional finance backgrounds, ramping up deposits on the platform,” Merghart said. “These are buy-and-hold clients, unlike prop shops in 2017.”
Retail accounts make up about 80% of deposits on Bitstamp. The company experienced growth in retail deposits under $2,000 over the past month when U.S. stimulus checks were issued, Merghart told CoinDesk during a phone interview.
Robinhood, an online brokerage app, said Thursday that 9.5 million customers traded cryptocurrencies during the first three months of the year, up from 1.7 million in the fourth quarter of 2020.
There just wasn’t much of a bitcoin stimulus.
“I wasn’t expecting stimmies to pump bitcoin,” said Greenspan, of Quantum Economics. “There are much bigger players in the market now.”
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