- Bitcoin is down roughly 25% over the past month and 50% since fall 2021.
- Investors with more moderate wealth are reconsidering spending on big-ticket items.
- Ultrawealthy crypto investors, however, are leaning into hard assets like yachts or real estate.
Alexandru Muresan became a crypto millionaire because of a trampoline park.
In March 2020, the entrepreneur sold a trampoline facility he owned in Georgia and divided the proceeds between the stock and cryptocurrency markets. Muresan invested $ 500,000 in crypto that eventually grew to $ 1.2 million, he told Insider. In September 2021, an investment in NFTs netted the 34-year-old a few hundred thousand dollars more.
Things were good.
Muresan, who lives in Miami, started shopping for a $ 2.5 million yacht for a different business venture. But in May, as the crypto market – entered a period of precipitous decline amid rising interest rates, inflation, and broader economic uncertainty – he thought again.
“Timing wise, it’s probably going to take a little bit longer” before he can pull the trigger on the yacht, Muresan said.
The crypto market has been in freefall. Bitcoin prices have plunged about 25% since April, to roughly $ 28,700 from nearly $ 40,000, and 50% from late 2021. Luna, the sister coin of land that was formerly pegged to the US dollar, has lost 99% of its value. Muresan realized his portfolio wasn’t the only one that had taken a hit.
“I thought it was just me,” he said. “But it turns out that there’s a lot more people that are either thankful they still have a nine-to-five or they’re like, ‘Holy shit, on paper it looks like my
is half of what it was two weeks ago. ‘ It’s a little bit scary. “
Philipp Sandner, the head of the Frankfurt School Blockchain Center at the Frankfurt School of Finance & Management in Germany, told Insider that many people have “lost a lot of money” in the crypto crash. They also, he added, lost the resources or will to keep pouring money into crypto. That in turn creates a lack of
that keeps the price from rising, tying the hands of smaller investors.
While the Alexandru Maresans of the world rethink their investment strategies and waylay big purchases for sunnier financial times, ultrawealthy crypto investors aren’t reeling in their spending in the same way. The main reason for this, according to brokers of luxury goods like real estate and yachts, is that most ultrawealthy crypto holders have diversified their portfolios with investments in other asset classes that insulate them from market.
Some of these ultrawealthy buyers are even seizing the moment as an opportunity to gain a competitive edge in markets that have been short on supply over the past few years, swooping in and purchasing luxury assets as others quash frivolous spending habits.
Just ask top real estate agents in South Florida and New York or the founders of Kitson Yachts, a Bal Harbor-based brokerage that handled 10% of superyacht sales globally in 2021.
Crypto investors see real estate as a safe haven
Miltiadis Kastanis, a realtor with Douglas Elliman in Miami, has seen the way ultrawealthy crypto holders are leaning into real estate in South Florida. He’s one of the realtors representing Five Park, a planned luxury tower in Miami’s South Beach neighborhood where condos are priced starting at about $ 3 million.
“I recently got a call from someone who asked if one of my new development projects accepts cryptocurrency, and I first thought it was a little odd,” given the market’s struggles, Kastanis told Insider. “He seemed unaffected by the downness of the coin because he made so much on it based on his original acquisition price. He was going to sell out of his crypto and buy a hard asset like real estate, instead of a
This current economic moment has also started to recast how some wealthy investors think about cryptocurrencies. Once considered a safe-haven investment, like gold, it’s now apparent that digital assets like bitcoin are not stable.
Kastanis said he’s seeing his wealthiest buyers seize this moment as an opportunity to build more wealth by making investments in high-quality properties.
Fredrik Eklund, a Douglas Elliman broker who works in luxury markets from Los Angeles to the Hamptons, said in mid-May that buyers in the superprime space – generally defined as properties that cost $ 10 million or more – were using the carnage of the financial markets to guard their wealth.
“That’s why we’re seeing an uptick in the superprime-buying segment in the last two months alone,” Eklund told an audience of brokers and developers at a May 19 panel, “Secrets of Selling to the Super Prime,” at Five Park . “When crypto or stocks go down, investors often take their money and put it into the real-estate market, especially in a year like this because owning property is a hedge for inflation.”
The real-estate market was one of the sectors that recovered the most quickly from the economic fallout of the pandemic coronavirus, according to a report on the 2022 luxury market from Sotheby’s brokerage. The report found that an initial decline in prices for high-end properties quickly reversed. More people purchased homes to lease out for rental income, putting even more constants on housing supply.
“When you’ve got high inflation, people are looking for income from their portfolios,” Liam Bailey, Knight Frank’s global head of research, said. “It may well be that investment property is a destination of choice, because at least there’s an income flow.”
Kirsten Jordan, an Elliman broker who stars on Bravo’s “Million Dollar Listing New York,” acknowledged that the market has slowed as mortgage rates rise and the stock and crypto markets waver.
But, she added, real estate “has held better than the stock market every single cycle, especially in New York.”
She quipped that when crypto buyers come to town, she pulls out all the stops to make sure they’re seeing the best residences.
“If somebody calls me and says, ‘I have a crypto buyer in town from LA or Canada,’ I’m like, ‘Who can be there to show this guy this apartment?'” She said. “Because it might be our best chance.”
There’s still wild demand for superyachts
The yacht market appears similarly buoyant.
The pandemic was a boon for the supersized vessel: Reuters reported that sales of superyachts, which measure 131 feet or more and can range in price from $ 10 million used to $ 600 million new, rose 8% in the first nine months of 2021 compared to the same period in 2019. A representative for Superyacht Times said the trade publication logged 5 billion euros (or $ 5.36 billion) in sales of used yachts over 30 meters (or 98 feet) in 2021.
Kitson Yachts cofounder Tony Imbesi said at the Five Park panel that the superyacht buyers his firm advises and works with who hold crypto do not typically rely on those portfolios to purchase vessels.
Kitson’s other cofounder, Michael Tabor, told Yahoo Finance that he finds buyers of yachts over 100 feet in length are more protected from volatility in the marketplace than buyers of yachts under 100 feet in length.
Imbesi said Kitson “expects the downturn will provide buying opportunities for our customers who have been sitting on the sidelines,” adding that the company is “still seeing demand outweigh supply.”
Kastanis has observed a similar pattern. Some prospective real-estate buyers with deep pockets are taking advantage of the volatility to swoop in, while others are taking a more judicious approach to protecting their wealth.
“Some of my buyers who are on the fence are taking a break, and they’re asking to wait,” Kastanis said. “But while they’re asking to wait, other buyers are coming in and buying the properties.”
‘I’m reconsidering not just my spending habits’
Muresan is one of the pausers.
The crypto downturn has forced him to rethink not just his yacht purchase but also where he lives.
He moved to Miami’s trendy, street-art-filled Wynwood neighborhood in November 2021 and soon after traded up for a larger rental apartment in the same building. But now, he and his girlfriend are considering relocating to a more affordable area, like the Indonesian island of Bali or a country in South America.
“Because of the last couple weeks, I’m reconsidering not just my spending habits, but relocation,” he said. “I don’t think it’s worth spending those two years of a
– if it lasts that long – in a place that’s as expensive as Miami. ”