In a research report by Goldman Sachs, bitcoin and cryptocurrency He said the impact of the recent decline in the U.S. market on aggregate spending will likely be very small.
The report also noted a very limited impact for an increase in labor force participation due to the declines.
“One-Third of Cryptocurrency Market Value in US Households”
The bank said that the ratio of cryptocurrency wealth held by investors in other countries is also an important consideration. Goldman estimates that US households have about a third of the global crypto market’s $1.3 trillion market cap.
This means that the recent decline in crypto market capitalization is very small compared to the net worth of US households, which stood at $150 trillion in the fourth quarter of 2021.
“The Decline in the Crypto Market Didn’t Affect the Americans Much”
The research noted that recent crypto price drops have reduced crypto holdings in the US by nearly $300 billion, which currently accounts for only 0.3% of the net worth of US households.
By contrast, stocks accounted for about 33% of household net wealth at the end of last year, and the recent drop in stock markets has likely reduced household net worth by approximately $8 trillion.
Tighter financial conditions will likely cause a rapid slowdown in growth and spending this year, but any incremental impact from the recent drop in crypto prices will likely be “low,” the research said.
However, it is believed that the impact of the decline in some crypto-assets will be greater in other countries. For example, the price of the Terra (LUNA) token, in which more than 200,000 people invested in South Korea, was virtually zero.
*Not investment advice.