Notes

Will the housing market crash and how will it affect cryptocurrencies?

Is 2022 the new 2008?

With inflation high and investors pulling out of their properties amid market uncertainty, the housing market has seen a downturn. While a decline in the housing market can be expected due to higher interest rates on mortgages and loans, but also because many people have joined the market looking to buy property, the purchasing power of the majority has fallen significantly.
But even if there is consolidation in 2008, can we expect the housing market to collapse in the same way? Many indicators point to this possibility, with many mortgage-backed ETFs experiencing levels of volatility not seen since the 2008 crash, with Vanguard leading the way with fluctuations of up to -10% in intraday and after-hours markets. However, while the housing bubble has definitely ended with house prices rising 20.6% year-on-year compared to income growth of just 4.8%, the full housing collapse, if it happens, may be the institutions to blame.

Why institutions become dominoes to begin to fall

According to the Mortgage Bankers Association's latest quarterly report on commercial loans, outstanding numbers reached a record $74.2 billion. These commercial buildings house some of the world's leading companies and institutions, and given the current macroeconomic conditions, high inflation, rising interest rates and low market confidence, a further downturn would be catastrophic.
It is no secret that many institutions are exiting certain market positions to cover a possible call for additional payment and ensure financial security for the future. However, continued declines in the markets will further erode their AUM and potentially move the needle towards a margin challenge. If this happens, not only will there be a wave of redundancies, but commercial debt default is a real possibility. Moreover, if this happens on an industry scale, the result will be a domino effect.
This is definitely the worst case scenario, but greed and lack of accountability by institutions have caused similar events in the past, and that was 2008.

The influence of cryptocurrencies

The impact this may have on the crypto market causes more exits in most cases, however for those who truly believe in crypto, it should be taken without concern. Now, no one should rejoice in the misfortune of others, but cryptocurrencies have already established themselves in the mainstream and the adoption curve is not slowing down anytime soon, even if it is going down. an opportunity for financial freedom will arise in the market. The crypto market may return to the prices we saw at the start of the last bull run of 2017, however, the technology is much more mature and secure than before, with usage and adoption by wider society only growing. No one wants the housing market to crash, and while a 2008-like collapse is unlikely, there is a possibility. If this happens, remember that financial freedom comes from selfishness when others are afraid.


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