Bitcoin watchers have noticed surprising amounts of real estate profits being converted into bitcoin. The reason comes down to unpredictable returns in real estate for wealthy investor-buyers.
At the same time, “Bitcoin, as an emerging asset class, potentially offers much higher growth potential for many investors,” writes Nik Hoffman for Bitcoin Magazine.
Wow, much potentially potential! But seriously, does this have any relevance for regular home buyers? Let’s take a look.
A Watershed Moment in the World of Finance
Finance giant Goldman Sachs, which is poised to enter the bitcoin market, thinks institutional and government acceptance of blockchain tech will bring digital assets to the mainstream in 2024. Goldman’s digital assets expert Matthew McDermott says businesses that use blockchain like its efficiency. And they’re creating their own blockchains now.
Blockchain-based assets could finally become normalized this year. Already, they’re more than a novelty. Why would global investment companies roll out digital assets? To meet (and even help create) customer demand.
As of January 2024, the U.S. Securities and Exchange Commission (SEC) is poised to approve 13 applications to launch exchange-traded bitcoin funds for people’s investment and retirement accounts. McDermott from Goldman observes that the expected approval of these exchange-traded funds will “invite investments by pension funds and insurers who will improve Bitcoin’s overall liquidity.” Seems we’re witnessing a watershed moment in the financial world.
“The migration of investment capital from real estate to Bitcoin represents a potentially monumental shift in financial paradigms,” says Bitcoin Magazine. Well, it’s definitely a signal of mainstream cryptocurrency adoption.
But the publication is talking about the ultra-rich. And it’s reporting on investments in a Swiss cryptocurrency exchange. But are everyday people thinking this way?
Some, indeed, are asking…
What’s the Better Investment: A Home or Bitcoin?
Most people will continue thinking of real estate as their key wealth builder. It’s proven itself so far. Although the real estate market has its ups and downs, it generally rises in value over the decades. And that’s just one of many things we love about homeownership.
Bitcoin, like real estate (as bitcoin holders point out), is finite — which is one element of a strong investment. That said, you can’t live in your bitcoin! The demand for real estate will always be uniquely important.
And if you secured one of those super-low-rate mortgages in 2021, you might have no interest in selling your home at all during this time. If your mortgage rate is so low that it will be less than the rate of inflation, that debt you took on will be paying you!
So, do you think exchanging the value in a rental property for bitcoin could ever be worth it? Some might think so. Some will instead hold onto their investment properties, collect rents, and then convert that income into digital assets.
In any case, nobody — no matter how many YouTube followers they have, no matter their title at Goldman Sachs — can give ironclad predictions on the future of crypto.
Some people will invest in bitcoin in the hopes of being able to afford a down payment on a home — either by eventually selling or borrowing U.S. dollars against blockchain assets. This is likely to become much easier as the big financial institutions settle into the world of digital assets. Look for companies that accept bitcoin as collateral for home loans. They’re coming.
Please note: Deeds.com is not a financial adviser. Nor are we affiliated with the companies or assets noted in this article. We offer this article to our readers for general and timely information, and not as financial guidance. Speak with a professional if you have questions about the best investments in your situation.
Supporting References
Nik Hoffman for Bitcoin Magazine via Nasdaq.com: Real Estate Investors Are Flocking to Bitcoin in Record Numbers, Says Swiss Exchange (Dec. 18, 2023).
David Thomas and Ryan James for BeInCrypto.com: News Report – Goldman Sachs Expects Crypto Market to Explode in 2024 as Traditional Institutions Enter (1 Jan. 2024).
More on topics: Buying a home with bitcoin, Bitcoin for mortgages and down payments
Photo credit: AlanHarder.ca / Mortgage Studio, via Wikimedia Commons (licensed through Creative Commons as Attribution 2.0 Generic).