Analyst: ‘Maxed Out’ US Consumers Could Put Bitcoin at Risk

According to data released on Wednesday, Americans are taking longer to pay off their debt.

Despite the fact that the unwinding of the yen carry trade has probably stopped since Monday, risk assets like bitcoin (BTC) have stabilized. However, there are still hazards, such the slower U.S. consumer borrowing, according to Markus Thielen, the founder of 10x Research.

Stagnant Credit Growth

According to data provided by the Federal Reserve on Wednesday, total credit outstanding climbed by $8.9 billion in June after an upwardly revised $13.9 billion in May, falling short of the average projection of a $10 billion gain.

Credit card debt, or revolving debt, which permits users to access funds up to a predetermined limit and pay back the loan over time, decreased by $1.7 billion, the largest amount since early 2021. The largest increase in a year was seen in non-revolving debt, which includes auto loans and college tuition, which increased by $10.6 billion.

Rising Delinquency Rates

The rising delinquency rates, which are an indication of collapsing household balance sheets, are possibly more worrisome. The percentage of those who are over 90 days behind on their credit card payments, or delinquents, reached a record high of 10.93% in the June quarter, which was not seen since the first quarter of 2012. Auto-loan delinquencies, meanwhile, reached 4.43%, the highest level since 2021.

According to Thielen, it’s an indication that American consumers have reached their borrowing limit and challenges bullish narratives surrounding cryptocurrencies.

Implications for the Crypto Market

A plummeting personal savings rate is indicated by weak U.S. consumer credit data, which fell from $11.3 billion to $8.9 billion (below the anticipated $10 billion) mostly because of very high delinquencies and rare negative credit card debt. In a note to clients, Thielen stated, “This is significant for crypto as it suggests the fiat-to-crypto onramp will remain constrained due to U.S. consumers who have reached their maximum capacity.”

Could Bring More Risk

Moreover, Thielen listed declining AI excitement, the US economy’s slowdown, and the unpredictability surrounding the US election as threats to the cryptocurrency market. With the release of ChatGPT in late 2022, both Bitcoin and Nvidia (NVDA), a leading indicator of all things AI, reached their lowest points.

According to trading platform TradingView, NVDA shares have plunged below $98, having peaked in June at nearly $140. As of this writing, the price of bitcoin was $56,800, down 10% over the previous seven days, according to CoinDesk data.