How Will Bitcoin Respond During The New Global Real Estate Crash?

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Last Updated on 8 May 2022 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
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Bitcoin’s genesis block holds the key to its creation. Back in 2009, as the housing crisis and the collapse of global banking giant Lehman Brothers the previous fall urged the anonymous Satoshi Nakamoto to create a form of money that wouldn’t devaluate whenever a central bank decided to print more fiat, he linked Bitcoin’s creation directly to the financial crisis of 2008-2009.

Into the genesis block he added the Times article title of 3 January 2009, stating:

Chancellor on brink of second bailout for banks.

In essence, Bitcoin was created just as the last global housing crisis began. Fast forward some 13 years and the world’s biggest crypto coin may have fallen in value since it’s all time high of last year, at $35,000 per coin it still outranks any other investment vehicle made since 2008 in terms of growth.

However, as we’re seeing the first worrying signs pop up of a possible new real estate crash around the corner in the western world starting in 2022 (see Billy Markus, Dogecoin creator’s tweet of this week), it will be interesting to see how Bitcoin will react now. Can it restore its former safe haven label or will it look for a bottom just like tech is apparently seeking to do?

Advertentie.

Screaming headlines at 20% drop

Already in April there were signs of a cooling housing market in Australia (where the CEO of a property developer admitted that ‘demand has collapsed’) and the UK sees a similar story unravel.

Mark Bainey, CEO of Sydney-based property developer Capio Property Group said clearly that “buyer inquiry levels are down 50 per cent at the moment, so demand has essentially collapsed”. Consider how bad the market must be before any developer admits as much.

As May is starting, the Netherlands and Belgium seem to follow suit ever faster with more and more of the mainstream media admitting falling house prices. Of course, as 70% of the general population in Western Europe owns a house and is thus paying for a mortgage, don’t expect the MSM journalists to write out in bold that they are losing money anytime soon. The Washington Post yesterday said a ‘crash is unlikely’, which should thus be read as ‘possible.’

Mark Zandi, chief economist at Moody’s Analytics, at the same time spoke of “markets where we will see a price decline of around 5% to 10%.”

For those with short term memory, most US media said last year that high inflation would be ‘transitory’. By now it’s 8% in the US and Europe.

It will only be when real estate prices have fallen 20 to 30% that you will see screaming headlines, just like the MSM only admitted back in 2009 that the Irish, Spanish, Greek and Italian housing markets had collapsed long after everyone knew that a similar situation had taken place in the US.

Work from home shift

Even Germany could be prone to falls of housing prices as loans get pricier and families reconsider their priorities. Soaring energy prices will lead to smaller house requests from families whose future looks uncertain in a tight labor market with new demands. Furthermore, the growing demand for Work From Home flexibility among white collar workers will lead to a redistribution of the housing demands, see the excellent new book Going Remote, which predicts this (and explains in detail why).

So how will Bitcoin perform if this happens? Will it retake it’s old role as a safe haven next to gold, or will it fall further together with tech stocks, just like it’s been doing in the past few weeks; And for those who think that crypto and real estate markets aren’t linked, consider how many transactions and mortgages have been secured by crypto investments as of late.

Interesting times.