How the Biden administration's student loan forgiveness may impact the crypto market?

President Joe Biden was met with waves of excitement and criticism Wednesday when he launched plans to forgive up to $20,000 in student loan debt for some borrowers. Now that millions of especially young Americans are about to be less burdened with debt, it may be natural to wonder: Will some of that newly free money find its way into the crypto market? In the same way, the stimulus that was given during the covid pandemic helped the surge of cryptocurrencies and the stock market.

Biden said he plans to use his executive authority to cancel $10000 of student loans (up to $20,000 for Pell Grant recipients) for people whose annual income during the pandemic was under $125,000 ($250,000 for married couples).

This plan will benefit around 36 million people most of them between the age of 18 and 39, and according to https://www.pewresearch.org 25% of this age bracket have used or are currently using cryptocurrency.

This could mean new liquidity flooding the market.  With rough estimates being between $3 billion and $27 Billion.

So prices are moving up, right?

Not so fast!

we shouldn't forget that currently because of inflation, the economic recession, the bear market, and higher interest rate consumer and investors are afraid and may be hesitant on pouring new money into new investments or even old ones.

As of today Aug 31, 2022, the crypto fear and greed index is at extreme fear. Obviously, this may change in the coming weeks but still, this is a huge factor that most likely will hold investors out of the market for a while.

All of this means that investors are much more likely to react to the Fed's next moves, as opposed to the next step toward loan forgiveness.