Own assets or be left behind: this is what the analysts of the Kobeissi Letter asserted, highlighting the major gap between those who do so and those who stay away.
Bitcoin fits surprisingly well into this warped economy, but viewing it as a cure for the destruction of the middle class would be a bit of a stretch.
Own assets or get left behind
There are about 134.8 million households in the United States, according to analysts. However, about 1.4 million of them, also called the top 1%, control more than $60 trillion in net worth. Since 2020 alone, their wealth has increased grew up of more than 30,000 billion dollars. The poorest 50%, or 67.4 million households, collectively hold a fraction of this amount.
The reason is not simply that rich households earn higher wages; the biggest divide concerns ownership of assets, Kobeissi’s letter states. Total U.S. household wealth has exploded from about $101 trillion six years ago to $185 trillion today, but this massive increase has been distributed very unevenly.
Americans who already owned high-value stocks, businesses, real estate, and other assets benefited disproportionately from rising prices. Meanwhile, inflation has gradually eroded the value of income and liquid savings. Analysts have separately calculated that the greenback has lost around 23% of its purchasing power since 2020.
In other words, a person whose savings or assets increased by 30% over that period made only a relatively modest real gain after accounting for the decline in purchasing power. Inflation has also remained well above the Fed’s 2% target for 60 straight months.
Food, housing, transportation and other necessities have become more expensive, while the assets needed to escape this erosion, primarily housing and inventory, may also become more difficult to acquire. Analysts added that borrowing has provided little relief, with mortgage rates recently climbing toward the average 7% range. At the same time, Treasury yields have surged, further raising the barriers to homeownership.
Therefore, they concluded something simple and obvious: “Own assets or be left behind.”
Does BTC fit here?
Bitcoin is important in this macro dynamic, even if it’s not as simple to say that it can somehow save the middle class. BTC addresses one specific part of the above argument quite well: its supply cannot increase in response to government spending, deficits, elections, wars, or monetary policy. There will ultimately be no more than 21 million units, which will fundamentally differentiate it from cash, whose purchasing power can and probably will decrease as the monetary base expands.
It is also exceptionally accessible compared to many traditional wealth-building assets. You don’t need a required down payment for a house or enough capital to purchase an entire BTC. If the fundamental problem is that people who hold scarce and appreciating assets are increasingly outpacing those who save exclusively in depreciating currencies, Bitcoin offers another way to move to the side of asset ownership.
On the contrary, bitcoin remains very volatile, which is not ideal for inexperienced investors. It can lose 50% or more during severe recessions in just a few months. Typically, just holding it generates no cash flow and provides little help to someone whose income is already consumed by rent, food, health care, and debt.
It cannot magically make housing more affordable, raise real wages, reduce health care costs, improve taxation, or redistribute existing wealth. As such, it is safe to say that BTC cannot rebuild the American middle class. However, a scarce asset that virtually anyone can own and that is not backed by any central authority can provide individuals with an additional means of exposure in an economy where asset ownership increasingly determines who preserves and grows wealth.
The American middle class is crushed: what is the place of Bitcoin? appeared first on CryptoPotato.
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