A potential surge in US tax refunds next year could reignite retail appetite for high-risk investments, according to a strategist at Wells Fargo. The bank believes that higher refunds, expected to arrive by late March, may push fresh capital into Bitcoin and momentum-driven stocks favored by individual investors.
In a note cited by CNBC, Wells Fargo analyst Ohsung Kwon said that improving household cash positions could bring back the so-called YOLO trade, a term used to describe aggressive bets on volatile assets. Kwon estimated that as much as $150 billion could flow into equities and Bitcoin by the end of March, driven largely by higher-income consumers receiving larger-than-usual refunds.
Bitcoin and momentum stocks back in focus
Kwon suggested that part of this refund-driven liquidity could find its way into Bitcoin, which continues to attract retail interest during periods of rising risk appetite. He also pointed to stocks that have historically seen heavy retail participation, including trading platform Robinhood and aerospace giant Boeing.
According to the note, the dynamic is less about long-term fundamentals and more about timing and sentiment. When savings increase and markets show signs of upward momentum, retail investors tend to re-enter risk assets quickly. Wells Fargo said this behavior was especially evident during previous cycles when excess cash met strong narratives around technology and digital assets.
The bank has not yet shared details on how it arrived at the $150 billion estimate or how much of that sum it expects to flow specifically into cryptocurrencies. Requests for clarification were not answered at the time of publication.
Sentiment remains key for crypto inflows
While the prospect of refund-driven inflows has caught attention, analysts caution that Bitcoin demand will still depend heavily on broader market sentiment. Nicolai Sondergaard, a research analyst at crypto intelligence firm Nansen, said retail participation is highly sensitive to price direction and confidence.
Smart money trader positions through the Hyperliquid exchange, top tokens. Source: Nansen
If crypto markets begin to show sustained upward movement, Sondergaard believes the likelihood of new funds entering digital assets increases. On the other hand, if sentiment remains weak, retail investors may choose assets with stronger social buzz or faster momentum elsewhere in the market.
He also noted that the current environment differs from the pandemic era, when stimulus checks and lockdown savings sharply boosted speculative activity. Higher inflation and ongoing consumer spending pressures could limit how much of the refund money is ultimately allocated to crypto.
Tax changes set the stage for higher refunds
The expectation of larger refunds is linked to recent changes in US tax policy under President Donald Trump. Trump signed the One Big Beautiful Bill Act into law on July 4, 2025, promoting it as a sweeping effort to reduce federal spending while offering favorable provisions for 2025 tax filings.
The legislation is expected to result in higher refunds for many filers in 2026, particularly among higher-income households. Wells Fargo believes this group is more likely to channel excess cash into financial markets rather than immediate consumption, increasing the odds of renewed speculative trading.
Whales accumulate while smart money stays cautious
Even as retail interest remains uncertain, large crypto holders continue to build positions quietly. Data from Nansen shows that whale wallets accumulated more than $41.9 million worth of spot Ether over the past week, spread across 22 wallets. This marked a notable increase compared with previous weeks.
At the same time, traders categorized as smart money by Nansen, based on historical performance, are positioning more defensively. These traders were net short Bitcoin to the tune of $107 million and held bearish positions across most major cryptocurrencies, with the exception of Avalanche.
The contrast highlights a market split between long-term accumulation by large holders and short-term caution among active traders. Whether refund-driven retail flows are enough to tip the balance may depend on how quickly sentiment improves in the weeks ahead.
