According to CoinDesk, the percentage of credit card loans in serious delinquency in the U.S. has reached its highest level in over a decade, potentially indicating a challenging period ahead for the U.S. economy and speculative activities. The rate of credit card loans with balances outstanding for more than 90 days increased to 10.69% in the first quarter, the highest since the second quarter of 2012, according to data recently published by the New York Federal Reserve. Despite balances declining by $14 billion to $1.12 trillion during the first quarter, they're still 13.1% higher than the year before.
Austan Goolsbee, the president of the Chicago Federal Reserve Bank, has previously stated that cracks in consumer finances are one of the most concerning economic data points, often serving as a leading indicator that the economic situation may worsen. An increase in debt means less disposable income and a reduced inclination to invest in risk assets such as meme coins. Luigi Guiso, Tullio Jappelli, and Daniele Terlizzese, in an article in the American Economic Review, suggested that borrowing constraints can lead to individuals keeping a lower proportion of their wealth in illiquid and risky assets.
Meme coins, considered among the riskiest of digital assets, have been under pressure in the past four weeks, falling more than market leader bitcoin. Top meme coins by market value like DOGE, SHIB, and WIF have dropped over 20% against bitcoin's 2.4%, according to Coingecko data. However, this does not necessarily mean a complete collapse in meme coins, as 'degens', or people engaging in high-risk speculative trading in the crypto market, might persist. Kelly Greer, head of Americas sales at Galaxy, suggested that degens are likely to stay active in the market despite mounting debt levels.
