According to CoinDesk, U.S. consumers are accumulating debt at a slower rate amid rising credit card delinquencies. This trend is expected to constrain the fiat-to-crypto onramp, as noted by 10x Research's founder Markus Thielen. The Federal Reserve's data released on Wednesday showed that total credit outstanding increased by $8.9 billion in June, following an upwardly revised $13.9 billion in May, missing the consensus estimate of a $10 billion increase.
Revolving debt, which includes credit cards, fell by $1.7 billion, marking the most significant drop since early 2021. In contrast, non-revolving debt, such as student loans and auto loans, rose by $10.6 billion, the largest increase in a year. The increasing delinquency rates are a sign of deteriorating household balance sheets. In the June quarter, the share of credit card delinquents, or those late on repayments for more than 90 days, was 10.93%, the highest since the first quarter of 2012. Auto-loan delinquencies also rose to 4.43%, the highest since 2021.
Thielen highlighted that the weak U.S. consumer credit data, which dropped from $11.3 billion to $8.9 billion, below the expected $10 billion, mainly due to negative credit card debt and soaring delinquencies, signals a collapsing personal savings rate. This is significant for the crypto market as it suggests the fiat-to-crypto onramp will remain constrained due to maxed-out U.S. consumers. Thielen also pointed out other risks to the crypto market, including the uncertainty surrounding the U.S. election, the slowing U.S. economy, and dwindling AI hype. Both bitcoin and Nvidia (NVDA), a bellwether for 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 was trading at $56,800 at press time, down 10% in seven days, according to CoinDesk data.