With the US holding one-third of the available crypto assets out there, there is looming fear and worry that it might take a toll on the US economy with all that is going on in the industry. The US is going through a continuous increase in the inflation rate and crypto experiencing one of its worst declines.
The decline of the crypto industry has caught the eye of many US lawmakers, as they are worried that it would make the situation of the country worse. This is because the US holds about one-third of the crypto global assets.
With the recent drop and the looming fears, ideas are flying around but Goldman Sachs, a banking giant, does not see a reason for the government to be bothered by the crypto market. He said that the revival of the crypto market will not have a great effect on the US economy.
Goldman Sachs economists made clear that the aggregate US resident’s net worth is around $150 trillion as of last year and that the value of crypto has dropped by $1 trillion this year. The economists believe that it is still too little compared to the US resident’s net worth.
Jan Hatzius who led the Goldman Sachs economists mentioned in a report that they expect that the recent drops in the prices of cryptocurrencies will have a very small effect on spending as a whole.
Crypto’s Effects on US stocks
The recent drop in the value of the cryptocurrency market contributed to a loss of more than $7 trillion for the equity market in the United States. This has prompted economists to ponder and study the effects of recent events on the sell-off in the crypto and equity market on a much larger economy.
It was discovered that a dollar lost in stocks would cause a fall in spending by 3 cents in households, which after 5 months of selloffs would be equal to around $300 billion cuts in spending just this year.
The Goldman Sachs study, US stocks made up 33% of the accumulated US household total value by last year, while Crypto on the other hand was accounting for 0.3%.
Economists for Goldman Sachs mentioned that this suggests that changes in stock prices are the major cause of changes in household total worth, while crypto plays a small role.