Build a Digital Real Estate Crypto Portfolio with RedSwan CRE
It is a great time to start a digital real estate crypto portfolio. The back half of 2020 has been a huge period for crypto adoption. Unprecedented central bank money printing to support economies during the coronavirus pandemic and slashing of benchmark interest rates to near-zero have caused many to question the long-term value and stability of fiat currency. In response, for the first time, many institutions, financial and otherwise, have looked to cryptocurrencies as a viable long-term store of value and/or the payment method. A recent high-profile case is the publicly-traded software company Microstrategy (ticker: MSTR) deciding, in the 3rd quarter of this year, to allocate almost all its excess cash — over $400mil — to Bitcoin. As of this writing, they are sitting on almost $300mil of paper gains. Just yesterday, the press reported that 169-year-old life insurance company Mass Mutual purchased $100mil of Bitcoin for its general assets account. Moreover, PayPal, the popular P2P wallet and e-commerce payments provider announced in October that account holders will be able to buy crypto within its wallet and use it as a form of tender when making online purchases. Finally, the price of Bitcoin, at the current $18K price is up to 2.5x from the beginning of year level, seemingly minting new millionaires and billionaires every day.
While this is all great, the risks cannot be ignored. We only need to look back at 2018 to see what happened. After touching $20K early in the year, Bitcoin collapsed, reaching a low of about $3K in December of that year. Crypto is still only a 12-year-old phenomenon, with the first Bitcoin minted in January 2009. While the recent Bitcoin run-up appears to be supported by a more solid foundation due to deep-pocketed and stable parties such as Microstrategy and Mass Mutual backing and evangelizing cryptocurrencies, there is no guarantee that crypto volatility has been eliminated. How can an investor with significant crypto assets reduce the volatility of his/her portfolio? Close readers of mine know the answer to this….commercial real estate!