Bitcoin (BTC) Faces Risk From 'Maxed Out' U.S. Consumers, Analyst Says

U.S. consumers are accumulating debt at a slower rate, data released Wednesday showed. Although the unwinding of the yen carry trade has likely paused since Monday

U.S. consumer credit barely increased in June, a sign that Americans are taking on less debt amid rising prices, high interest rates and fears of a slowing economy.

Total credit outstanding increased by $8.9 billion in June, data released by the Federal Reserve on Wednesday showed. This follows an upwardly revised $13.9 billion in May and misses the consensus estimate of a $10 billion increase.

Of the total, revolving debt, representing credit cards, fell by $1.7 billion, the most since early 2021. Non-revolving debt, which includes student tuition and auto loans, rose $10.6 billion, the biggest increase in a year.

While the headline figure may not be concerning on its own, it comes amid other worrying signs, such as a decline in personal savings and increasing delinquency rates.

The June quarter saw the share of credit card delinquents or those running late on repayments for more than 90 days, rise to 10.93%, the highest since the first quarter of 2012. Meanwhile, auto-loan delinquencies hit 4.43%, the highest since 2021.

Both are a sign that U.S. consumers may have maxed out on their borrowing capacity, which could pose a challenge to bullish crypto narratives, 10x Research's founder Markus Thielen told clients in a note.

"Weak U.S. consumer credit data, which dropped from $11.3 billion to $8.9 billion (below the expected $10 billion), mainly due to rare negative credit card debt and soaring delinquencies, signals a collapsing personal savings rate," Thielen said.

"This is significant for crypto as it suggests the fiat-to-crypto onramp will remain constrained due to maxed-out U.S. consumers."

Thielen also highlighted the uncertainty surrounding the U.S. election, the slowing U.S. economy and dwindling AI hype as risks to the crypto market.

Both bitcoin and Nvidia (NVDA), a bellwether for all things AI, bottomed out with the debut of ChatGPT in late 2022.

Shares in NVDA peaked in June near $140 and have since dropped to $98, according to charting platform TradingView. Bitcoin changed hands at $56,800 at press time, down 10% in seven days, according to CoinDesk data.