Are Record-High Housing Prices Ready to Fall?, Bitcoin Wins Billionaire Michael Dell’s Poll, Barstool Sports Founder Recommends Bitcoin-only, Peter Thiel Says BlackRock Has Co-opted Bitcoin
News Block #45 (07/04/2024)
Listen to the latest episode of the News Block below. 👇
Are Record-High Housing Prices Ready to Fall?
In the words of the brilliant Lyn Alden – nothing stops this train! The reckless fiscal spending train – and if that doesn’t change soon, neither will the outlook on inflation!
The Congressional Budget Office recently raised its projection AGAIN for this year’s deficit. This time, the CBO increased 27% to $1.9 trillion.
In the Bank of International Settlements’ recent annual report, the BIS said that governments should make it an “absolute priority” to cut back on their spending to reduce inflationary pressures, but all signs point to the opposite occurring.
One area where inflation has been especially painful for people is the housing market. After the government and Federal Reserve ballooned the money supply to the tune of trillions of dollars, the median price of a home in the U.S. has exploded.
According to Charlie Bilello, new home prices in the U.S. have increased from about $369,000 to $525,000 in the last four years alone, up about 30%.
This, combined with mortgage rates nearly tripling over this time frame, has led to housing affordability sinking to historic lows.
The cost of a typical home – including mortgage payments, property insurance, and taxes – consumes 35% of the average wage, the highest since 2007.
But, according to Saifedean Ammous, this unaffordability is just a continuation of a long-term trend.
Saif recently shared a chart highlighting how housing affordability, measured by home prices as a multiple of average earnings, has declined since the gold standard was first abandoned way back in the early 1900s.
Why? He argues that the lack of housing affordability is the result of governments devaluing the money. Home prices have risen so fast because people can’t save in fiat anymore, so they are forced to save in real estate instead. This has driven home prices up way beyond their utility and at a faster rate than people’s incomes have grown, making them unaffordable.
In other words, it always comes back to the money.
Many expected the housing market to cool off after mortgage rates rose from around 3% to 8%, but that’s not been the case. According to the Case-Shiller Home Price Index, home prices hit an all-time high in April for the second straight month in a row.
Some have speculated that this is because higher rates have stopped homeowners from selling, keeping homes off the market. The low mortgage rates people have locked in are acting like “golden handcuffs” because no one wants to move when their mortgage rate will more than double. This has caused the available supply to go down, and thus, prices remain up.
But as new homes have been built, we are beginning to see signs that supply is returning to the market. The problem is that people can’t afford to buy them!
Charlie Bilello reports, “There are now 481,000 new homes for sale in the US, the highest inventory since January 2008…In the past 50 years, when supply was this high the U.S. economy was facing job losses and recession. Today, however, high supply is due to the least affordable housing market in history.”
”Could this flood of supply finally result in lower home prices? Amy Nixon thinks this could be the case in some regions but not all. She’s my guest this week on Coin Stories. We discussed some signs of weakness in the housing market today and why Bitcoin should be considered an alternative to real estate investing.
Don’t get me wrong – I think homeownership is a key pillar of the American Dream, and it’s the major purchase I hope Bitcoin can help me afford someday soon.
It’s a shame that, over the last four years, millennials have been priced out of the market due to the combination of money printing and the central bank hiking interest rates.
But, as Saifedean said, the long-term trend is clear. If our elected officials continue to spend like there’s no tomorrow and debase the money, then home prices will continue to rise over time.
That’s why it’s absolutely critical for people to save in something that will outperform the increase in home prices so that they, too, might be able to afford to buy one in the future.
The reality is it doesn’t matter which party controls the Oval Office. Both of them spend and add fuel to the inflationary fire. That’s why, come November, my vote is for Bitcoin.
Bitcoin Wins Billionaire Michael Dell’s Poll
All 8 billion people in the world need a solution to the problem of currency debasement. It doesn’t matter if you have a net worth of $100 or $10 billion dollars. Everyone needs protection.
I think that’s why we’re seeing highly successful billionaires expressing more interest in Bitcoin. As discussed in last week’s News Block, the latest billionaire to tweet about Bitcoin is Michael Dell, Founder and CEO of Dell Technologies.
Dell recently made waves after he posted several pro-Bitcoin tweets, and he didn’t stop either.
His latest tweet was a poll. Take a look at it.👇
After more than 64,000 votes, the results were in. Bitcoin received 43% of the vote, followed by love and relationships at 39%.
Now, personally, I think love and relationships are extremely important, but I also love Bitcoin, so I guess can get behind these results.
What’s more notable here is that Michael Dell, one of the wealthiest individuals in the world, seems to be flirting with Bitcoiners.
All eyes are now on Dell’s next quarterly filings. Will the company announce a Bitcoin allocation?
NYDIG’s Ross Stevens said it best years ago when he said, "Cash is no longer an asset. It is a liability for these corporations.” As companies like Dell's cash continues to depreciate, I think it's only a matter of time before they come to Bitcoin, whether this quarter or one further down the road.
Barstool Sports Founder Recommends Bitcoin-only
Each company will get bitcoin at the price it deserves, and one new company that has recently announced plans to buy some is Barstool Sports.
Its founder, Dave Portnoy, announced that he plans to buy five to ten million dollars worth of bitcoin with the company’s money. This comes after Dave recently recommended that the only crypto people should be involved with is Bitcoin.
This sage advice comes after years of pain for Dave after he lost a bunch of money dabbling in other cryptocurrencies.
Take a listen to this clip.👇
First, kudos to Dave for coming to the right conclusion—Bitcoin is different. Second, I hope people learn from Dave’s mistakes and really listen to what he said here.
Unfortunately, I’ve seen it time and time again. People lose money investing in alt tokens and eventually realize that all they have to do is buy and hold Bitcoin. The good news is you don’t have to get burned like Dave. You can skip all that pain and just focus on investing in Bitcoin for the long term.
Portnoy now says that he’s waiting for Bitcoin’s price to dip before buying five to ten million dollars of Bitcoin with Barstool Sports’s money. While I fully support this corporate strategy, Dave is making another classic mistake here. You shouldn’t try to trade Bitcoin!
With Bitcoin, it’s wise to consider the old adage, “Time in the market beats timing the market.” Given its volatility, Bitcoin is extremely difficult to trade successfully.
If Dave is listening, maybe this stat will change his mind — Did you know that on average, 13 out of every 100 gamblers beat the casino, but only 1 out of every 100 day traders beat the market?
That’s only 1%! Those are some pretty terrible odds.
Regardless, the key point is that everyone must take their own journey, and what matters most is that Dave seems to be on the right path today. It’s been great to see how Dave has grown since he came on my show a couple of years ago.
So I’d like to personally say, welcome to team Bitcoin, Dave.
Peter Thiel Says BlackRock Has Co-opted Bitcoin
The last bit of news came from another billionaire talking about Bitcoin – Peter Thiel.
In a recent interview, Peter Thiel expressed skepticism about Bitcoin, saying it has moved away from its founding vision and has been potentially co-opted by BlackRock with its ETF.
Thiel also mentioned that he doesn’t think Bitcoin will go up much further from here.
Now, I have some thoughts here because, in the past, Thiel has been very supportive of Bitcoin, calling it “digital gold” and “the most honest market we have.”
In fact, these recent comments come only about two years after Thiel gave a keynote speech at Bitcoin 2022, in which he said that Bitcoin's price would go 10 to 100 times higher than the current price, which was around $43,000 per coin.
So why the pivot now? I’m only speculating here but we have to at least entertain the idea that Thiel is just trying to spread fear and doubt to buy back lower. In the same interview, he did admit that he didn’t buy enough Bitcoin, maybe he wants more.
This wouldn’t be the first time he pulled something like this. We now know that when Thiel was making those bullish comments at the Bitcoin conference, his fund was actually unloading its positions before the bear market crash to under $20,000.
I mean, on its face, his comment that BlackRock is co-opting Bitcoin doesn’t really make any sense. The beauty of Proof of Work is that no one can control the protocol or change Bitcoin, no matter how much Bitcoin they own. This has me wondering if Thiel really believes what he is saying or is simply trying to move the price down to get a better entry position.
As they say, don’t listen to what people say; watch what they do.
Until next week, keep stacking.
- N₿
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NEW: Housing Market Outlook and Why Investors Are Turning to Bitcoin with Amy Nixon
In this episode with Amy Nixon we discuss:
- Prices in residential and commercial real estate around the country
- Are we heading into recession?
- Is it better to rent or own?
- What's a better investment: Real Estate or Bitcoin?
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