Bitcoin
Real estate is the new luxury for Bitcoin millionaires
The narrative that early Bitcoin investors indulged in extravagant luxuries like Lamborghinis is changing.
Recent research suggests that crypto millionaires are now channeling their newfound wealth into real estate investments, indicating a more mature spending pattern.
Bitcoin Millionaires Are Maturing
According to a to study involving researchers from esteemed institutions such as Brigham Young, Northwestern and Imperial College London, the rise in crypto wealth has notably influenced the American real estate market.
Their analysis, presented to the Federal Deposit Insurance Corp., used data from 60 million people over 13 years. It revealed that approximately nine cents fueled household spending for every dollar of unrealized crypto gains.
While social media often glorifies lavish spending on luxury cars and jewelry, the real economic impact of crypto wealth has been more nuanced. The study highlights a propensity among cryptomillionaires invest in housing. This is similar to traditional capital investments rather than fleeting lottery winnings.
“Our estimates suggest that household spending on crypto earnings more closely aligns with the patterns of traditional stock investments,” noted Darren Aiello, assistant professor of finance at BYU.
See more information: Who owns the most Bitcoin in 2024?
This trend was particularly evident in 2017, when Bitcoin rose from about $950 to $14,000. The researchers found that home prices rose significantly faster in areas with high levels of crypto involvement than in less crypto-centric locations. Specifically, homes in these crypto-rich counties have appreciated in value by an additional 43 basis points in 12 months.
Furthermore, a separate analysis of cryptocurrency brokerage withdrawals showed that substantial amounts withdrawn led to an increase in housing spending shortly afterwards.
“For every household that withdrew $5,000 from their cryptocurrency exchange account, one in 20 purchased a home for the first time,” shared Jason Kotter, another BYU finance professor.
The shift to real estate investing among Bitcoin Millionaires reflects a strategic approach to asset management. It diverges from the stereotypical image of frivolous spending.
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