A significant portion of U.S. adults—more than half—are experiencing a squeeze where inflation is climbing faster than their wages are growing. This perception reflects a real economic tension that's shaping consumer behavior and market sentiment across sectors.

What does this mean for crypto investors? Purchasing power erosion typically drives people to look beyond traditional savings. When real income (adjusted for inflation) stagnates or declines, asset diversification becomes more attractive. Bitcoin and other digital assets have historically positioned themselves as inflation hedges, offering an alternative to currencies losing value through monetary expansion.

The gap between wage growth and price growth also impacts risk appetite. Stretched consumers may pull back from speculative positions, or conversely, they might allocate small portions to higher-risk assets seeking better returns. Either way, macro headwinds like these influence market cycles and sentiment volatility.

Keeping tabs on these broader economic trends helps traders and long-term holders stay grounded in fundamentals rather than pure technicals. When household finances tighten, the macro environment shifts—and smart investors adjust positioning accordingly.