Federal savings rate has crashed to multi-year lows. "Buy the dip" players are all but out of the market.

Charts from the St Louis Fed shows that the Personal Savings Rate has plunged to multi year lows. People just arent saving enough currently.

Federal savings rate: Last time it was this low was in 2013!

After spiking massively during 2020 (covid years) as people were stuck in home and had a lot of spare income that they could allocate towards savings and investments, it has now crashed as cost of living expenses shot upwards.

What does this mean for crypto investors, or any investor? In simple terms, less and less money is out there waiting to buy the dips. March 2021's favourite stock or coin is down 80% from ATH? Very few are interested in touching it right now, as many dont have the savings to allocate towards investments.

Wages are not keeping up with inflation, let alone increase in commodity prices. War and fiscal policy tightening are expected to lead to an increase in food prices. A lot of people are in risk of food shortage.

Discretionary spending is down across verticals. Instead, more is being spent on gas, insurance and housing as cost of living has shot upwards.

People have borrowed huge sums to participate in the post covid bull market that was fuelled by zero interest rates.

Now that the mean seems to be reverting, majority of market participants are already swimming naked.

A concoction of high inflation + low savings + crash in asset prices + soaring cost of living (increasing commodity prices) + fiscal tightening/QT by Federal Reserve suggests that a wrecking ball is currently heading the way of capital markets and the economy. The only question is how much will it destroy, will the markets be able to get away with limited damage or will it ravage asset prices to generational bottoms..

Sources: Personal savings - St. Louis Fed: https://fred.stlouisfed.org/series/PSAVERT

Daily Shot for discretionary spending charts.