Is Bitcoin Expensive? It's Worth Less Than 50% Of New York City's Real Estate

New York is the most populous city in the USA, with 8.8 million inhabitants spread over 783 square kilometers. The city comprises 5 districts, which include the famous Manhattan Island, Bronx, Brooklyn, Queens, and lastly, Staten Island.

If it were an isolated country, the N.Y. metropolitan area would be the 15th largest economic power in the world, with a Gross Domestic Product of 1.3 trillion dollars, above Mexico and Netherlands, right below Spain.

How Much is New York Real Estate Worth?

According to a survey by ‘Zillow,’ the city’s real estate market value is $1.7 trillion. It is worth noting that the NYC “metropolitan area,” which includes New Jersey, Jersey City, Stamford, New Haven, and surroundings, increases such a number to $3.2 trillion.

This number equates to 8.8% of the entire North American market, valued at 36.2 trillion. The whole world? About 290 trillion, of which 75% are residential properties.

How Much are Bitcoin and Cryptocurrencies Worth?

At $42,300, the market value of Bitcoin is 800 billion. Meanwhile, the total of all cryptocurrencies is 1.9 trillion, although that includes stablecoins and some unknown projects.

In other words, Bitcoin is equivalent to 50% of real estate in New York City, or 25% if we consider the metropolitan region.

At first, it may seem that there is no relationship between the numbers, as real estate can generate income. However, real estate can remain empty for several months, besides the maintenance costs.

Similarly, there are platforms — decentralized or not — that allow cryptocurrency loans. In other words, by renting, it is possible to earn income with Bitcoin.

Is Bitcoin a Good Store of Value?

Yes. Many people assume that a Store of Value requires price stability or predictability. Gold and real estate are classic examples of investments for those seeking to protect themselves from inflation or the devaluation of the local currency.

Below is the FED data on median sales price for new houses sold in the U.S. Note the declining trend from 2018 to 2020, despite the SP increasing by 21% during the same period.

In short, real estate prices fluctuate, as does gold’s price. For example, after reaching a $2,060 historical high in August 2020, it dropped by 15% in four months, dropping to $1,775 by November. By the way, gold currently trades near $1,750 but continues to be used by banks, companies, mutual funds, and governments as a Store of Value.

Thus, being a Store of Value means the capacity of an asset to maintain its purchasing power in the long run.

Is Real Estate Safer than Bitcoin?

No. First, we must consider the issue of liquidity. A property worth $400k can take weeks or even months to be sold.

Meanwhile, high-end properties usually demand a bigger discount at the time of sale, risking waiting even longer to find a buyer.

Then there is the matter of depreciation. Properties need maintenance, in addition to condo fees and taxes. There is also the risk of new areas being developed, reducing the appetite for used homes.

By contrast, Bitcoin is a protocol, so it can be updated as new technologies are tested and deemed safe by its users’ base.

What is the Potential Market for Bitcoin?

Bitcoin is initially sought after by those fleeing inflationary currencies or seeking sovereignty through decentralization. Thus, some analysts, including JPMorgan, see a $130,000 target price.

However, some believe that cryptocurrency will gain more adoption after reaching a certain level. Consequently, the $500,000 prediction by ARK Capital’s Cathie Wood may be correct.

Does it look too optimistic? At that unit value, the market value would be 10 trillion dollars, slightly below gold’s current $11 trillion capitalizations.

Lastly, it is worth noting that Bitcoin is not competing exclusively with gold or real estate, as this independent monetary system also functions as Means of Exchange. Moreover, it will likely surpass many global fiat currencies by being divisible, transportable, durable, fungible, transparent, and scarce.

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