As the IRS prepares to issue larger tax refunds in 2026, one Wall Street strategist believes this could spark a significant boost in risk appetite, particularly for digital assets and tech stocks favored by retail investors. In a recent note, Wells Fargo analyst Ohsung Kwon suggested that the influx of cash from tax returns, especially among higher-income earners, could drive as much as $150 billion into equities and Bitcoin (BTC) by the end of March.
“Speculation picks up with bigger savings…we expect YOLO to return,” Kwon wrote. “Additional savings from tax returns, especially for the high-income consumer, will flow back into equities, in our view,” he added. This prediction hinges on the assumption that the extra cash will be allocated to high-risk, high-reward assets, a trend commonly associated with the ‘YOLO’ (You Only Live Once) trade mentality.
Bitcoin and Tech Stocks in the Spotlight
According to Kwon, some of this liquidity is likely to flow into Bitcoin and stocks popular among retail traders, such as Robinhood and Boeing. The YOLO trade has historically been characterized by retail investors pouring money into volatile assets, often driven by social media hype and the desire for quick gains.
Nicolai Sondergaard, a research analyst at crypto intelligence platform Nansen, agrees that sentiment plays a crucial role in this scenario. “If sentiment starts to come around and retail sees positive upwards momentum in crypto assets, I see that as increasing the likelihood of funds flowing in this direction,” Sondergaard told Cointelegraph. However, if digital asset sentiment remains tepid, retail investors might opt for other assets with ‘higher momentum and social stickiness,’ he added.
The Role of Inflation and Consumer Spending
The larger tax refunds are a result of the One Big Beautiful Bill, signed into law by former President Donald Trump in 2025. This legislation includes numerous favorable provisions for 2025 tax filings, potentially leading to significant savings for many taxpayers. However, it’s important to consider the broader economic context, including higher inflation and consumer spending, which differ from the conditions during the COVID-19 pandemic.
The crypto market’s response to these refunds will also be influenced by the actions of large investors, or whales. According to Nansen, while smart money traders are currently betting on a crypto market downturn, with a net short position of $107 million on Bitcoin, whales are quietly accumulating significant amounts of Ether (ETH). Over the past week, whales have acquired over $41.9 million worth of spot ETH tokens across 22 wallets, marking a 1.7-fold increase in spot purchases.
Looking Forward
The potential influx of $150 billion into Bitcoin and tech stocks could have far-reaching implications for the market. While the YOLO trade is often associated with short-term volatility, the long-term impact could be a more sustained interest in digital assets and tech investments. As retail investors become more confident in the market’s upward momentum, this could lead to a broader adoption of cryptocurrencies and a reinvigoration of the tech sector.
However, the success of this prediction will ultimately depend on various factors, including economic conditions, market sentiment, and regulatory developments. As the market continues to evolve, it will be crucial to monitor these trends and their potential impact on the broader financial landscape.
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