Bitcoin could experience an uplift in price because Wells Fargo estimates that up to $150 billion of tax refunds will be given to Americans for their 2025 tax filing. This may spur a YOLO inflow into risky assets. Historically, the liquidity wave season has often resulted in intense speculative activity in Bitcoin, meme coins, and small-cap tokens.
The refunds are partially linked with the favorable provisions in the 2025 tax law. Zero changes to the IRS withholding tables are also bound to make more cash handed back to taxpayers. It is estimated that more than 60% of the refunds would have been made by the end of March 2026. Analysts believe that the influx would be a catalyst for retail trading activity in the short run.
YOLO Trade Inflow To Boost Bitcoin
Wells Fargo estimates that the refund-led liquidity injection would increase investments in risk-on assets, especially those most preferred by retail traders, according to a CNBC report. Refund seasons have historically boosted speculative retail activity, often referred to as YOLO activity. During this period, excess cash is invested in volatile markets to get quick returns.
The bank also observed that Bitcoin has behaved like a proxy of domestic liquidity, which dropped by $105 billion in the last four weeks. According to TradingView data, the BTC price dropped by approximately 28% over the same time.
Source: TradingViewThis correlation implies that in case a liquidity rebound happens, it would boost BTC price gains as long as retail involvement intensifies. Part of the anticipated flow would be from high-income earners. They could invest their surplus savings into equities and speculative asset funds.
Pattern Signal Possibilities of Post-Red Streak Reversal
The market mood is fragile, with Bitcoin on course for a fifth consecutive monthly decline. The trend was pointed out in a chart by analysts at Milk Road, a crypto analytics platform.
According to them, the last time that Bitcoin recorded at least five consecutive red months was in the 2018-2019 bear cycle. This cycle lasted between August 2018 and June 2019, with Bitcoin declining by almost 60% in six months. Then, it started a 5-month recovery, recording a 300% upswing.
Milk Road observed that a probable reversal could commence as early as April 1, 2026, in case history repeats itself. This would coincide with a period when the liquidity in tax refunds would likely be at its peak. Meanwhile, veteran trader Peter Brandt predicted that Bitcoin could rebound in the short term.
However, Brandt disagreed that BTC is currently forming an inverse head-and-shoulders pattern, which typically hints at a bullish reversal. This suggests that any short-term rally is more likely a relief bounce rather than the bottom of this current bear market.
Source: https://coingape.com/wells-fargo-predicts-bitcoin-rally-on-150-billion-yolo-trade-inflow/
