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

Anantha Divakaruni () and Peter Zimmerman
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Anantha Divakaruni: University of Bergen, 5020 Bergen, Norway

Management Science, 2024, vol. 70, issue 4, 2066-2085

Abstract: In April 2020, the U.S. government sent economic impact payments (EIPs) directly to households as part of its measures to address the COVID-19 pandemic. We characterize these stimulus checks as a wealth shock for households and examine their effect on retail trading in Bitcoin. We find a significant increase in Bitcoin buy trades of size $1,200, which is the modal EIP amount. We find similar increases in trading for other countries that paid out stimulus checks. We estimate that the EIPs have a significant impact on the U.S. dollar–Bitcoin trading pair, increasing buy volume by 3.8% and the price by 0.6%. We also find that demand for Bitcoin is highly price inelastic compared with the demand for stocks. We suggest the demographic characteristics that make people more resilient to the COVID-19 economic shock—single, computer literate, and educated—are also characteristics of people who are more interested in Bitcoin.

Keywords: Bitcoin; COVID-19; retail trading; stimulus checks (search for similar items in EconPapers)
Date: 2024
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http://dx.doi.org/10.1287/mnsc.2023.4790 (application/pdf)

Related works:
Working Paper: Uncovering Retail Trading in Bitcoin: The Impact of COVID-19 Stimulus Checks (2021)
Working Paper: Uncovering Retail Trading in Bitcoin: The Impact of COVID-19 Stimulus Checks (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:70:y:2024:i:4:p:2066-2085

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