The price of a family home in the US tells two very different stories depending on how it is measured. Comparing the stories underlines bitcoins appeal as a long-term hedge against dollar depreciation, the erosion of value in the fiat currency.
According to Fidelity Digital Assets, a typical American house has gained more than $100,000 since 2020. This increase in home prices is said to generate a positive wealth effect, an economic phenomenon in which rising home values make homeowners feel wealthier. They feel richer, spend more, borrow more and grow the economy, even though their actual income remains unchanged.
But what if the gain is just a mirage?
Price the same house in bitcoin and the narrative changes dramatically. What required more than 50 BTC in 2020 now costs only 5 BTC, a 90% drop.
“What appears to be appreciation in housing is more accurately a reflection of an erosion of the fiat currency. The issue is the unit of account — not the asset itself,” said Zack Wainwright, digital asset analyst at Fidelity.
