House Prices Drop 90% When Calculated in Bitcoin... The Dollar's True Face Revealed

▲Bitcoin, Housing/AI Generated Image ©

An analysis suggests that if US housing prices are converted to Bitcoin (BTC) terms, it's not that house prices have risen over the past few years, but rather that the value of the dollar has significantly depreciated. Bitcoin's long-term value as an inflation hedge is also gaining renewed attention.

According to investment specialized media CoinDesk on July 9 (local time), Fidelity Digital Assets analyzed that the price of a typical US home has increased by more than $100,000 since 2020. Generally, rising home prices are considered a factor that creates a 'Wealth Effect,' increasing consumption and lending. However, if the same house is converted to Bitcoin, a house that required over 50 BTC in 2020 can now be purchased for approximately 5 BTC, indicating about a 90% drop in price based on Bitcoin.

Jack Wainright, a digital asset research analyst at Fidelity Digital Assets, explained that this change demonstrates a decline in the value of fiat currency, not an increase in housing value. He stated, "The problem is not the asset, but the unit of value measurement," analyzing that decades of monetary supply expansion have kept inflation above the US Federal Reserve's (Fed) 2% target for a prolonged period, resulting in the dilution of the dollar's value. Conversely, Bitcoin, with its limited supply of 21 million units, can serve as a neutral benchmark to illustrate this currency depreciation.

The media added that this phenomenon is not unique to Bitcoin. Even when comparing housing prices against gold, the 'Magnificent 7' large tech stocks, or the Nasdaq index, a decline in fiat currency value can be observed, albeit to varying degrees. However, despite Bitcoin's price falling by half to $63,000 since October last year, its appeal as a long-term inflation hedge asset remains intact.

An analysis also suggested that the short-term price recovery depends on institutional investment demand. The media explained that inflows into Bitcoin spot ETFs, including BlackRock's iShares Bitcoin Trust (IBIT), which is considered a key indicator of institutional investor sentiment, are crucial variables. IBIT ended a multi-billion dollar streak of net outflows this week with inflows exceeding $200 million, but sustained inflows are needed for Bitcoin to rebound.

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