This development suggests that the yen carry trade may have largely stalled as of Monday, and risky assets, such as bitcoin (BTC), are stabilizing from this situation. But other risks, such as slower borrowing by U.S. consumers, still exist, according to Markus Thielen, founder of 10x Research.

Total loan volume increased by $8.9 billion in June, following an upward revision of $13.9 billion in May.

However, this increase was below the expectation of a $10 billion increase, according to data published by the Federal Reserve. The data offers clues about the economic effects of consumers’ lower borrowing rate.

Revolving debts, that is, debts through which borrowers have access to funds up to a certain limit through credit cards and can repay this debt over time, fell by $1.7 billion in June. This was recorded as the largest decrease since the beginning of 2021.

The decline in revolving debts shows that consumers are having difficulty paying their debts and there is a decline in credit card usage.

On the other hand, debt, which includes non-revolving debt, long-term loans such as student fees and auto loans, increased by $10.6 billion in June, the largest increase in a year. This means consumers are taking on more debt to make big expenses, but these debts are often longer-term.

However, one of the most worrying developments is rising default rates. This increase, which indicates that the household balance sheet is deteriorating, is observed especially in credit card debts. In the June quarter, the delinquency rate for credit cards with payment delays of more than 90 days was 10.93%.

This rate marks the highest level seen since the first quarter of 2012. Additionally, the auto loan default rate increased to 4.43%, the highest level since 2021.

Markus Thielen states that these data indicate that the borrowing capacity of US consumers is exhausted and this poses a challenge for optimistic crypto investors.

According to Thielen, weak U.S. consumer credit data shows the personal savings rate is falling, particularly due to rare negative credit card debt and rising default rates.

This could be an important warning for the crypto market, as US consumers’ borrowing capacity could mean that the transition from fiat currencies to cryptocurrencies will remain limited.

Thielen also listed uncertainty around the US elections, a slowing US economy, and diminishing artificial intelligence hype as risks for the crypto market.

Nvidia (NVDA), seen as a pioneer of both bitcoin and all things AI, fell to its lowest levels with the launch of ChatGPT in late 2022.

Shares of NVDA fell to $98 after reaching nearly $140 in June, according to charting platform TradingView. Bitcoin, on the other hand, is trading at $ 56,800 as of press time and has lost 10% of its value in the last seven days.