Bitcoin News- U.S. Consumer Overextension Poses Risk to Bitcoin, Analyst Suggests
Bitcoin News- Although the unwinding of the yen carry trade appears to have stabilized since Monday, helping to stabilize risk assets like Bitcoin (BTC), other significant risks still persist. Markus Thielen, founder of 10x Research, points out that slower U.S. consumer borrowing remains a concern.
According to data released by the Federal Reserve on Wednesday, total credit outstanding increased by $8.9 billion in June, following an upwardly revised $13.9 billion rise in May. This increase fell short of the $10 billion anticipated by analysts. Revolving debt, which includes credit card balances, fell by $1.7 billion in June—the largest decline since early 2021. In contrast, non-revolving debt, such as student loans and auto loans, rose by $10.6 billion, marking the biggest increase in a year.
What’s particularly troubling is the rise in delinquency rates, which suggests deteriorating household financial health. In the June quarter, the proportion of credit card delinquents—those overdue by more than 90 days—hit 10.93%, the highest level since the first quarter of 2012. Auto loan delinquencies also increased to 4.43%, the highest rate since 2021. This indicates that U.S. consumers are reaching their borrowing limits, which poses a challenge to optimistic cryptocurrency forecasts.
Thielen commented, Weak U.S. consumer credit data, which fell from $11.3 billion to $8.9 billion—below the expected $10 billion—in part due to a rare decrease in credit card debt and rising delinquencies, signals a collapsing personal savings rate. This is crucial for the crypto market as it suggests that the fiat-to-crypto onramp will remain restricted due to overextended U.S. consumers.
Additionally, Thielen highlighted other risks to the crypto market, including uncertainty surrounding the upcoming U.S. elections, a slowing U.S. economy, and diminishing excitement around artificial intelligence (AI). Both Bitcoin and Nvidia (NVDA), a key indicator for AI-related investments, saw significant declines following the launch of ChatGPT in late 2022. Nvidia’s stock, which peaked near $140 in June, has since fallen to around $98, according to TradingView. Bitcoin, trading at $56,800 at press time, has dropped 10% in the past week, according to CoinDesk data.
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