Growth for Bitcoin in the US is difficult since 61% of US citizens live paycheck to paycheck
- Bitcoin price recently dipped to $26,000, instilling fear in investors' hearts regarding a recovery.
- About 65% of the people earning between $50,000 and $100,000 - the average income in the USA, are struggling to enjoy the luxury of having "throw away" money.
- Since BTC is a high-risk investment, thanks to the crypto market's volatility, the retail investor's concentration might decrease as people would refrain from risking their money.
While the crypto market may stand to be its own entity led by Bitcoin, it is still bound by the sentiment and demand of the investors. At the moment, this sentiment is not positive, and the demand is susceptible to a decline in the United States since it is becoming difficult for citizens to make ends meet.
Bitcoin and crypto investments might take a hit
Bitcoin and most of the other cryptocurrencies up until last year were mostly run by retail investors. However, at the moment, the crypto market is widely affected by the decisions of institutional investors who have invested billions into the industry.
Thus as large wallet holders stepped in, most of the altcoins found their supply sitting within their wallets. Now going forward, even if there is a chance for investors to take the supply with BTC trading at a year-to-date low of $26,000.
BTC/USD 1-week chart
The reason behind this is the fiscal condition of the citizens of the country, a significant chunk of which are living hand to mouth at the moment. According to a survey conducted by PYMNTS.com of over 4,600 Americans, it seems like the investors' condition is pretty rough.
Over 65% of the people earning between $50,000 and $100,000 - the average income in the USA, are living paycheck to paycheck.
Those above the $100,000 mark have observed virtually no change in spending patterns. The testing market conditions have resulted in no difference since the June 2022 survey, with about 45% of the investors still living paycheck to paycheck despite making over $100,000.
These investors hold the most influence on the crypto market, in addition to whales and institutions. As they have the "throw away" money necessary to invest in such a high-risk asset like Bitcoin, they have the most say in the market's movement.
However, if the global market conditions were to change, Bitcoin might find some support from this end. But most likely, for a while now, the crypto market is going to remain submerged in fear. This is evident from the Net Unrealized Profit/Loss (NUPL) metric, which dipped to a monthly low, sliding into the Hope/Fear zone.
Bitcoin NUPL
But looking at the Market Value to Realized Value (MVRV) ratio, it seems like Bitcoin might have a shot at recovery. The metric which measures the profits and losses of the investors is currently in the opportunity zone. This area is synonymous with recovery as, at this point (below 7%), investors tend to forgo selling and move to accumulate.
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Bitcoin MVRV ratio
Thus, Bitcoin price recovery could entice even those with no access to "throw away" money to bet on BTC. However, most likely, retail investors' money pouring into the market is a distant dream for now.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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Author
Aaryamann Shrivastava
FXStreet
Aaryamann Shrivastava is a Cryptocurrency journalist and market analyst with over 1,000 articles under his name. Graduated with an Honours in Journalism, he has been part of the crypto industry for more than a year now.
