• Is Bitcoin’s Slowdown Due To A Lack Of Savings?

  • According to new information, practically all of COVID’s surplus savings have been spent. The timing could be related to the price of Bitcoin slowing down.

    Could the Bitcoin slowdown be the result of Americans spending their extra cash?

    According to a survey by Zero Hedge, it appears that US consumers have already spent most of their surplus money.

    The term “excess savings” was coined during the COVID pandemic for a variety of reasons. One of them is that because people were forced to stay at home, they were unable to participate in many of their usual activities.

    All of the money that people would spend on going out, eating at restaurants, and doing other such activities would simply be saved. However, many people depleted their savings as a result of unemployment or other circumstances. These “extra savings” will, of course, be insufficient.

    These correspond to the timings of the stimulus checks to a tee. And it’s understandable because everyone got one, so the contribution to excess savings from these would be substantial.

    Savings were estimated to be around $1.3 trillion prior to COVID. These increased to roughly $2.5 trillion on average over the stimulus checks period (which also coincided with Bitcoin’s bull run).

    Today, the surplus savings amount to only about $1.7 billion. While the value is still $400 billion higher than pre-COVID, according to Zero Hedge, these gains will be erased by August at the current rate of consumer spending in the United States.

    The most recent stimulus payment was made to consumers in March. It’s worth noting that this coincides with the peak of the Bitcoin bull market.

    Bitcoin Price

    It’s possible that there is a link between excess savings and the price of Bitcoin. People with excess savings can invest more freely in assets like cryptocurrencies.

    However, once these extra savings run out, that will no longer be possible. This period following the third stimulus check, when savings reached an all-time low, appears to coincide with BTC’s lethargic price movement following the crash.

    Bitcoin’s price is around $39k at the time of writing, up 21% in the last week.

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