Own assets or be left behind — this is what the analysts at the Kobeissi Letter argued, highlighting the major discrepancy between those who do and those who stay on the sidelines.
Bitcoin fits surprisingly well into this distorted economy, but treating it as a cure for the destruction of the middle class would be a bit of an overstatement.
Own Assets or Get Left Behind
There are roughly 134.8 million households in the States, according to the analysts. However, around 1.4 million of them, also known as the wealthiest 1%, control more than $60 trillion in net worth. Since 2020 alone, their wealth has grown by more than $30 trillion. The bottom 50%, or 67.4 million households, collectively hold a fraction of that amount.
The reason isn’t simply that rich households earn larger salaries; the bigger divide is asset ownership, the Kobeissi Letter said. Total US household wealth has exploded from roughly $101 trillion six years ago to $185 trillion today, but that massive increase has been distributed very unevenly.
Americans who already owned stocks, businesses, property, and other appreciating assets benefited disproportionately as their prices rose. Meanwhile, inflation steadily eroded the value of income and cash savings. The analysts separately calculated that the greenback has lost roughly 23% of its purchasing power since 2020.
In other words, someone whose savings or assets increased by 30% over that period has made only a relatively modest actual gain after accounting for the decline in purchasing power. Inflation has also remained well above the Fed’s 2% target for 60 consecutive months.
Food, housing, transportation, and other necessities have become more expensive, while the assets needed to escape that erosion, mostly homes and stocks, can also become harder to afford. The analysts added that borrowing has offered little relief, as mortgage rates recently climbed toward the mid-7% range. At the same time, Treasury yields surged, raising the barrier to homeownership even further.
Consequently, they concluded something simple and obvious: “Own assets or be left behind.”
Does BTC Fit Here?
Bitcoin matters in this macro dynamic, even though it’s not as simple as saying it can somehow save the middle class. BTC addresses one specific part of the argument above quite well: its supply can’t expand in response to government spending, deficits, elections, wars, or monetary policy. There will ultimately be no more than 21 million units, making it fundamentally different from cash, whose purchasing power can and probably will decline as the monetary base expands.
It’s also unusually accessible compared with many traditional wealth-building assets. You don’t need a down payment required for a house or enough capital to purchase an entire BTC. If the fundamental problem is that people who hold appreciating scarce assets are pulling increasingly far ahead of people saving exclusively in depreciating currencies, bitcoin offers another way to get onto the asset-owning side of that divide.
On the contrary, bitcoin remains very volatile, which is not ideal for inexperienced investors. It can lose 50% or more during severe downturns in just months. In general, simply holding it generates no cash flow and offers little help to someone whose income is already consumed by rent, food, healthcare, and debt.
It can’t magically make housing more affordable, raise real wages, reduce healthcare costs, improve taxation, or redistribute existing wealth. As such, it’s safe to say that BTC cannot rebuild the American middle class. However, a scarce asset that virtually anyone can own and has no central authority behind it can provide individuals with one additional way to get exposure in an economy where asset ownership increasingly determines who preserves and grows wealth.
The post America’s Middle Class Is Getting Crushed: Where Does Bitcoin Fit? appeared first on CryptoPotato.
