Where the Crypto Bros Are Putting Their Profits

“We’re not gonna roundtrip it this time!”

That, perhaps, is the big takeaway from a crypto conference I attended last week in Dubai—the Token2049 conference, one of the largest crypto soirees on the planet.

This year’s version drew thousands of investors and lots of big names in crypto, including Jeremy Allaire, founder of Circle, the company behind US Dollar Coin (USDC), one of the world’s largest and most important stablecoins; and Arthur Hayes, founder of Bitmex, one of the original crypto exchanges and one of the most followed voices in the crypto space.

But what really resonated with me was the insistence that “we’re not gonna roundtrip” this time.

Those uttering that phrase are saying they refuse to ride their crypto to all-time highs, and then get greedy only to see the bottom fall out again.

Those of us in the crypto space for longer than a minute remember the crypto collapses of 2017 and 2022.

Max pain.

We don’t want to ride this dragon back down again.

So…

What to do?

Well, the answer to that question is about more than just crypto actually.

We are in a uniquely risky moment globally for all the reasons I’ve been writing about for many a month. Roundtripping crypto is, at this point in late-stage capitalism, no different than roundtripping the dollar… or roundtripping democracy for that matter.

I won’t get into that, though. Not looking to turn today’s dispatch into another sad story of the dollar or political discourse.

I will stay focused on crypto, just as the many people I met in Dubai are intensely focused on crypto this time around too.

We’ve all lived through the depression of watching our investments grind toward zero, refusing to sell because we all believed the rebound to new highs was just around a corner that, sadly, never came.

So even though we’re still early into the current crypto bull market—bitcoin will likely 3x from current prices—crypto veterans are already planning their exit in terms of where they want to put their crypto profits to work.

Most don’t really care much about the stock market.

Few have any real clue about the bond market. And even if they did, when you’re bagging 10x, 100x, 1,000x gains on a crypto token, the 15% or 20% annual gain you might see in bonds in a favorable year is chump change.

Plus, lots of crypto players recognize the dollar is The Next American Disaster and that the US debt situation is untenable. They don’t want to be fully dependent on the dollar and the US economy, just in case their worst fears are proven right.

Instead, many are talking about real estate.

Particularly real estate abroad, which gets them outside the greenback and outside Uncle Sam’s financial Eye of Sauron.

I had several conversations in Dubai about putting money to work in rental properties in high-demand overseas markets in Portugal, Spain, and along the east and west coasts of Mexico.

For what it’s worth, Portugal seems to garner the most interest, likely because the country has become well-known in crypto circles. Portugal is highly crypto friendly with a 0% tax on crypto profits, and Lisbon continues to host numerous crypto conferences, which expose people to the city’s beauty and charms.

That’s just an explanatory aside. I’m not trying to sell you on Portugal specifically in this dispatch…

What I am trying to sell you on is to begin thinking like the crypto bros and brosephinas, and consider putting some money to work in real estate outside the US.

The benefits are manifold.

1. Exposure to a non-dollar asset.

The greenback, which has been in decline since late 2021, has recently popped higher because of worries the Federal Reserve might not cut rates as fast as Fed governors initially anticipated back in December.

That’s happening as the EU in particular talks about cutting rates soon, following the likes of Switzerland, which has already cut rates.

But the dollar’s downtrend is destined to resume because of the debt. As soon as the US does begin cutting interest rates—and it will—the dollar starts to decline again.

This is a long-term decline.

The dollar, as measured by the Dollar Index that tracks the buck against a basket of world currencies, has been fundamentally weaker since the mid-80s—represented by a string of lower lows and lower highs. It’s an ever-downward slope.

2. Inflation protection.

Global inflation is a thing now. I’d call it is an almost-permanent new reality.

There’s simply way too much Western debt in the global financial system, and all that debt is forcing countries to print more and more money to make interest payments to their bond holders.

Those interest payments in the form of newly printed currency units are pouring back into the global economy, helping fuel inflation.

3. Rental income.

The real estate I want to own, and which I encourage others to own, is apartments and condos in high-traffic tourist locations near beaches and golf courses in the warm parts of the world, which is why I mention Spain, Portugal, and Mexico. I’d throw Costa Rica in there, too.

Vacationers love beaches. They are an endless draw. And the world is packed with golfers who want to play courses near beachy destinations.

That translates into a continual source of renters. Northern Europeans love escaping to southern Europe in winter to get away from the cold and snow… and they love escaping to southern Europe in the summer for a family beach vacation.

Americans, meanwhile, love flocking to Mexico and, increasingly, Costa Rica and Panama because they’re all so close that flight times are just a few hours at most.

Incessant demand for high-end properties in beach/golf destinations is a great source of income.

Combine all three of those bullet points and you have all the reasons you need to consider converting wealth—be that stock market or crypto market wealth—into quality real estate offshore.

Owning non-dollar assets such as real estate is a great buffer against dollar decline, ongoing inflation, and a source of continual rental income.

Inflation will drive the value of real estate higher since it’s a hard asset that routinely benefits from rising prices.

And because overseas real estate is priced in non-dollar currencies, the value of the property will rise in dollar terms as the dollar declines in value against the local currency.

Plus, you’re getting that income kicker that also benefits from inflation and the dollar’s decline.

Not hard to see why the crypto bros are suddenly talking about real estate as their play—so they don’t “roundtrip” their wealth once again…