We're on the verge of the biggest relief fund ever being sent to the people it's supposed to help.
The $2 Trillion Coronavirus Aid Package includes $500 billion for large companies, $339 billion for local governments, $377 billion for small business, and a long list of smaller allocations for specific or specialized purposes (such as stocking up on supplies in the case of future pandemics).
But the portion that could impact the markets - $560 billion, dedicated to helping individuals...
Distributed as direct payments appearing automatically in people's bank accounts, checks arriving in the mail, and additional payments on top of these which people can apply for online, such as unemployment.
Worth mentioning - for the first time ever unemployment will cover freelancers and gig workers, such as Uber drivers.
The basic breakdown is, any American earning under $99k will receive a payment of approximately $1200, then if they're not working at the moment (and most people are not) they qualify for unemployment - another $600/week. The unemployment is supposed to last up to 4 months, and while the $1200 is currently a 1 time payment, politicians are already discussing a possible second payment.
Stuck at home, no work, but still bringing in $3600 throughout April - this has to impact the market somehow...
Who else feels like most crypto traders will make sure at least some of this ends up in their portfolio?
I can confirm within the circle of friends I've been keeping in contact with while under these 'shelter in place' orders - some already know the first several trades they'll be making as soon as the funds appear in their bank account balance.
But that's hardly surprising among Silicon Valley millennial's - so i'm wondering, how about this generation in general? Keep in mind, the 'millennial' label covers everyone 22 to 38 years old, and while nobody can be sure, the crypto market is estimated to be made up mostly of people under 45.
With that in mind, I asked some experts from the tech and crypto world for their predictions on how these funds will be spent...
IBM Blockchain developer, Co-Founder of MarketOrders, and #1 best selling author Sukhi Jutla believes people will be putting a lot of thought into their spending, telling me "I think it’s becoming increasingly clear that the coronavirus pandemic is pulling us into uncharted territory and truly unprecedented times. I think they will be inclined to spend the money on essentials" that doesn't mean we won't be seeing the effects in the market, she added "I expect to see the crypto markets react in a volatile manner to the continued uncertainty in the markers and it is where ironically the most profits are made (in volatile markets) so we will see investors buying up a lot of cheap assets and also offloading them."
Steve Ehrlich, CEO and Co-founder of Voyager Digital believes many know how to play things smart, explaining "Initially, they’ll cover their basic needs and essentials first" but acknowledged, this is a generation that has learned to hustle "While many are concerned about their future, it’s this same worry that could lead them to investing for the future, by wanting to generate more from this money than received at face value. Keep in mind, millennial's are less risk-averse than older generations and more likely to see how they can put that money to work, whether through a side-hustle or investing".
On the other hand, Head of Product Strategy at TradeStation Crypto, James Putra, seems to share a similar view as my peer group. I asked him if crypto's current low prices are just too tempting to pass up, he said "Sure, those that are into trading and investing will likely seize the opportunity to go bargain hunting in the stock or crypto markets. I’m pretty sure that my check will go to cryptocurrency. It seems unlikely that those who are not currently investing will drop this found cash into stocks or crypto currency. This money gets them one step closer to that trip, house, retirement or other long-term financial goal."
Jonathan Keim, Director of Communications at InvestorBrandNetwork & CryptoCurrencyWire, balanced out the above points, he thinks if they have some savings already, these funds are prime to put into the market. Otherwise, they will likely guard any funds they need to survive on until they're able to work again "It’s very hard for someone who has never invested on their own to put money into anything with risk. I believe we’re more likely to see the parents of the millennial's put money into cryptocurrencies as a result of the lower prices and concerns over potentially unprecedented inflation."
But everyone, myself included is simply giving their best guess - it's going to be an interesting few weeks as these funds land in the hands of the people who will decide where they'll be spent.
We've never seen these conditions before, and no scenario in the past was similar enough to attempt to draw comparisons from history - there's nothing but uncharted waters ahead, as far as the eye can see.
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Author: Ross Davis
E-Mail: Ross@GlobalCryptoPress.com Twitter:@RossFM
San Francisco News Desk