Crypto firms report uptick in retail activity as US stimulus hits bank accounts

Retail activity in the crypto market appears to be surging — and, according to several trading firm executives, stimulus checks signed by Uncle Sam might be playing a role.    

Millions of Americans have been receiving $1,400 payments in recent works as part of the federal government's latest economic stimulus legislation.

"It seems that people are engaging with crypto and trying to maximize their check," said Steve Ehrlich, CEO of crypto trading platform Voyager.  "We are seeing a large amount of $1,400 checks being deposited into our platform."

That appears to be a shift from the end of March, when Ehrlich told CoinDesk that it was "too early to comment on the amount of money coming to our platform from the recent stimulus." 

During that last round of stimulus checks, Coinbase CEO Brian Armstrong noted the uptick in deposits that matched the size of the $1,200 checks given out to eligible Americans. A spokeswoman for Coinbase declined to comment for this article.

Stimulus payments have been hitting Americans' bank accounts since early last month. While many have used this cash to pay off debts that have mounted throughout the Covid-19 pandemic, others have viewed stimulus checks as an investment opportunity. 

Ken Griffin, the founder of Citadel Securities, told the Financial Times that he thinks the injection of more stimulus into the economy will increase the role that retail traders play in the US markets. Griffin has a good vantage point, considering Citadel Securities oversees 50% of retail stock trading in the US.   

Institutional adoption of crypto has been gathering steam, a trend illustrated recently by announcements by Morgan Stanley and Goldman Sachs that they would help wealthy clients get bitcoin exposure. But the retail market has been making a comeback at the same time, according to Hunter Merghart, an executive at crypto exchange Bitstamp.

In an interview with The Block, Merghart said that the firm, which mostly serves European clients, has seen an increase in US client activity over the last month and a half.  "Is that a function of stimulus?" he said. "It is hard to say." 

Indeed, it's difficult if not impossible to say definitely that the US government's stimulus checks are the culprit. Either way, the retail footprint in crypto markets appears to be growing.

According to Aya Kantorovich, an executive at trading services firm FalconX, the data suggests retail investors have indeed piled into the market in the midst of stimulus drops. 

FalconX sits behind several retail crypto platforms as a liquidity provider. "Buy ratios for retail aggregators increased during the weeks you provided of stimulus checks, most notably the week of 3.17.2021," Kantorovich wrote in an email to The Block. That means that such trading platforms saw their users skew bullish. 

But Kantorovich said retail is becoming a more potent force in the market for other reasons in addition to stimulus money.

“In a time when there is so much volatility in the traditional markets, crypto is less volatile,” she said. “People are seeing significant returns on their crypto investments and the folks who may have purchased crypto using their initial stimulus check are likely to spread that narrative around as something that has worked well for them.”