Real Estate Is the New Luxury for Bitcoin Millionaires

The narrative that early Bitcoin investors indulged in extravagant luxuries like Lamborghinis is shifting.

Recent research suggests 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 study involving researchers from esteemed institutions like Brigham Young, Northwestern, and Imperial College London, the increase 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 actual economic impact of crypto wealth has been more nuanced. The study highlights a propensity among crypto millionaires to invest in housing. This is paralleling traditional equity investments rather than fleeting lottery winnings.

“Our estimates suggest that household spending out of crypto gains aligns more with the patterns from traditional equity investments,” noted Darren Aiello, assistant professor of finance at BYU.

Read more: Who Owns the Most Bitcoin in 2024?

This trend was particularly evident in 2017 when Bitcoin surged from about $950 to $14,000. Researchers found that home prices rose significantly faster in areas with high levels of crypto engagement than in less crypto-centric locations. Specifically, homes in these crypto-wealthy counties appreciated by an additional 43 basis points over 12 months.

Moreover, a separate analysis of crypto brokerage withdrawals showed that substantial sums withdrawn led to increased spending on housing shortly thereafter.

“For every household that withdrew $5,000 from their crypto exchange account, one in 20 bought a house for the first time,” Jason Kotter, another finance professor at BYU, shared.

The shift towards real estate investment among Bitcoin millionaires reflects a strategic approach to wealth management. It diverges from the stereotypical image of frivolous spending.