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Despite the massive downturn on the real estate market, realtors in America are still hopeful they will see a rebound next year. However, some speculators believe the drop in pending contract sales and property values will drop even more soon. How will Bitcoin react?
If we take a look at the historical data when the financial crisis took their swing, we just might notice that they have been almost always followed by an arduous incline in housing prices. If real estate grows in a similar manner as the 2000s, safe-haven assets like gold and, therefore, Bitcoin could act alike.
The real estate market seems to be created to see a sharp sell-off in the second half of 2020. The U.S., Japan, South Korea, Singapore, and other popular markets are currently fighting with decreasing demand.
Highly-populated markets like Makati, Philippines, which saw housing prices rise to its record highs during the last few years, are also expected to see a 15% to 20% drop in value by the year’s end.
The medium-term trend of the housing market remains kind of shady. Still, a study shows that the next correction will sign the start of a strong housing market recovery.
A research paper published by the University of Granada and Federal Reserve Bank of Chicago says:
“During the late 1990s and up to 2007 several countries experienced sharp increases in house prices. These episodes are usually mentioned among the causes of the recent world’s economic and financial turmoil. The dramatic growth in bank lending during this period has been broadly held responsible for these market dynamics.”
Two Reasons for Estate Market Rise, Will They Have Impact on Bitcoin as Well?
The housing market, therefore, is used to seeing a continued rise after a financial crash and there are two possible reasons.
First, interest rates stay at a low level for quite a long time. It relieves stress from potential buyers in a market that is now relatively cheap.
Second, different forms of support packages and government aid are put there in order to lead the recovery of a country’s economy. Such attempts typically lead to a bigger appetite for real estate buying during the time to come.
During the next six months, the Federal Reserve does have plans to act as a cheapskate when it’s about stimulating the economy. Fed chair Jerome Powell estimated the unemployment rate in the U.S. to reach 25%, a level that hasn’t been seen since the Great Depression back in the 1930s. Among highly pessimistic economic projections, experts are mounting the pressure on the U.S. government.
Nobel laureate Joseph Stiglitz said last week that the absence of government support can become alarming.
“What worries me is that there won’t be enough government support, people will say we spent so much money to save the airlines, we don’t have enough money to shape the economy that we should have going forward.”
The pressure that is being appointed by both of those economists and the general population for more aid packages could make the Fed provide the economy with enough liquidity.
Experts think that after this financial crisis, definitely the biggest one in over a decade, the Fed’s combative attitude could end up having high levels of bank lending. That could boost the housing market entering 2021, setting it up for a strong decade to come.
They also added that the, already traditional, correlation of the real-estate market, together with the growing perception of Bitcoin as a store of value among institutional investors may show that housing, gold, and Bitcoin will perform strongly altogether over the long-term.
Miner Outflows Fuel BTC Price Pressure
The weekend’s trading saw fall for many crypto pairs as well as for BTC/USD as bears took the market below $9,000. This followed a hard few days last week, during which miner sell-offs rose completely.
Miners were selling more than they earned, despite their incomes already being 50% lower due to the halving two weeks ago. If this would continue, it will put further pressure on the price, which has already seen rejection closer to $10,000.
Support levels lower in the $8,000 range may be Bitcoin’s only firm hope of a bounceback if losses continue. At the time of writing Bitcoin was rising by 0.52% selling for $8,757 at 8:26 am ET.