Crypto Market Analysis: Consumer Savings Rate Suggests Continued Calm in Bitcoin Prices

Many economic indicators now point to relatively mild price action in the short term for crypto markets.

The U.S. central bank’s likely 50 basis point rate hike at its next Federal Open Market Committee (FOMC) meeting on Dec. 14 offered investors an encouraging retreat from the more hawkish 75 bps increases that resulted from its last four meetings. Inflation has been declining, although 50 bps is hardly dovish enough to return consumers whole-heartedly to riskier investments.

Yet a decline in savings may offer even more compelling evidence of cryptos’ likely, continued calm.

Inflation growth has exceeded wage increases for nearly two years.

As shown in this graphic from Compound Advisers, prices continue to increase at a faster pace than incomes. Not surprisingly, this trend has led to sharp increases in U.S. revolving debt balances. In turn, the personal savings rate in the U.S. has fallen to its second lowest rate in close to 60 years.

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