Why the amount of crypto cash held by Americans may decrease by 2026—and why Bank of Japan policy is crucial for bitcoin

With slowing income growth and weakening employment gains, Americans may be unable to invest in cryptocurrencies by 2026. Recent data from the U.S. labor market indicates that household finances may come under pressure next year.

The latest data shows that non-farm payrolls decreased by about 105,000 in October, then rebounded by about 64,000 in November. This uneven trend has raised concerns about the sustainability of income growth.

Senior investment strategist Kevin Gordon highlighted in a post on X that weak employment growth and slowing wage increases are leading to a reduction in disposable income.

Gordon stated that this trend could limit the amount of surplus cash that households typically allocate to high-risk assets such as cryptocurrencies.

Related:Why does Bitcoin remain volatile after the release of the latest U.S. employment report?

Altcoins Depend on Retail Discretionary Cash Flow

Interestingly, retail investors play a central role in the cryptocurrency market, especially outside of Bitcoin. Analysts point out that altcoins are more dependent on retail discretionary funds.

When household budgets tighten, demand for these assets tends to decline. In contrast, Bitcoin benefits from broader participation, including institutional investors and exchange-traded funds.

Fed Policy Remains Important, but Household Cash Reserves Determine the Economic Bottom Line

While a cooling labor market may give the Fed room to ease policy, analysts believe that liquidity alone may not fully offset the impact of declining household income.

A loose financial environment can push up asset prices, but rallies driven mainly by liquidity are often highly sensitive to broader economic changes. Therefore, the cryptocurrency market may increasingly rely on global monetary policy decisions rather than retail demand.

Bank of Japan Policy Puts Yen Carry Trades in the Spotlight

Market attention has also shifted to the Bank of Japan, which has signaled a gradual exit from decades of ultra-low interest rate policy. The market expects the Bank of Japan to raise rates by about 25 basis points, which would bring Japan's policy rate close to 0.75%.

Cryptocurrency commentator Mister Crypto said that because the Bank of Japan has an impact on global liquidity, investors are increasingly focused on the BOJ.

Another market observer, known as NoLimit, warned that he believes the shift in Japanese policy could have a direct impact on Bitcoin prices. He predicts that Bitcoin could plunge in the next five days.

Lark Davis, a cryptocurrency analyst and educator, pointed out that historical data shows Bitcoin prices have fallen after previous Bank of Japan rate hikes.

Davis stated that Bitcoin fell by about 27% after the March 2024 rate hike, about 30% after the July 2024 hike, and about 31% after the January 2025 hike. He also noted that before the latest policy expectations were announced, Bitcoin had already dropped about 7% as traders adjusted their positions.

Related:Trump interviews Waller, Fed chair selection process continues into early 2026.

Rising Japanese interest rates could lead to a stronger yen. And reduce the appeal of yen carry trades For a long time, Bitcoin has been an important source of global liquidity. Analysts say this shift could put pressure on leveraged assets such as Bitcoin, as forced liquidations amplify price volatility.