Will the housing market collapse? And how will it impact crypto?
Is 2022 the new 2008?
With high levels of inflation and investors withdrawing their assets amidst the uncertainty in the market, the housing market has seen a downturn.
While a downturn in the housing market should be expected from higher interest rates for mortgages and loans, but also as many who are looking to buy have assets attached to the market, buying power has significantly dropped for many.
However, although there is a juxtaposition to 2008, can we expect to see the housing market collapse in a similar fashion?
Many of the indicators are pointing to the possibility, with multiple mortgage security-backed ETFs experiencing levels of turbulence unseen since the crash of 2008, with Vanguard leading the way seeing fluctuations of up to -10% in the intraday and after-hour markets.
Nevertheless, while the housing bubble is certainly over with house price growth up 20.6% on the year compared to income growth of merely 4.8%, an all-out housing collapse, if it is to happen, may be due to institutions.
Why institutions could be the domino to start the fall
According to the latest quarterly report from the Mortgage Bankers Association within commercial debt, outstanding figures have reached record highs of $74.2 billion.
These commercial buildings are home to some of the world’s leading corporations and institutions, and given the current macroeconomic conditions, high inflation, increase in interest rates, and low confidence in the market, further downturn could be catastrophic.
It is no secret many institutions have exited some positions in the market to cover any potential margin calls and ensure they have financial security moving forward.
However, a continued downturn of the markets would further deplete their AUM and potentially move the needle towards a margin call.
If this were to happen not only could a wave of layoffs exist for employees, but defaulting on these commercial mortgage payments is a real possibility. Moreover, if this occurs at scale across industries then a domino effect would likely be the outcome.
This would certainly be the worst-case scenario, but the greed and lack of accountability from institutions have caused a similar occurrence in the past, and that would be 2008.
The impact on crypto
The impact that this would have on the crypto market would in most cases cause further exiting of positions, however for those that truly believe in crypto it should be welcomed not feared.
Now, nobody should be happy about others’ misfortune, but with crypto already embedding itself across the mainstream, and the adoption curve not slowing down any time soon, even with the market downturn, the opportunity for financial freedom would present itself.
The crypto market could be back at prices seen at the start of the last bull run in 2017, yet the technology is far more advanced and a safer bet than ever before, with use and adoption into wider society only increasing.
Nobody wants the housing market to collapse, and while a collapse like 2008 is unlikely, there is a possibility. If it were to happen, remember financial freedom comes from being greedy when others are fearful.
Through Logarithmic Finance investors can hedge themselves with presale projects
As the market takes a downturn, investors are continuing to search for opportunities to realize large returns on investment and combat the recent inflation figures.
As such, many are looking to presale and early-stage protocols where the risk-to-reward ratio offers investors the opportunity to do just as such, particularly when a portfolio across multiple projects is created.
Investing small amounts across a wide range of early protocols is a great way to spread your risk and still experience high yields.
It only takes one token in your portfolio to be successful to gain profit and is a tactic used for start-up projects for years across Web2 and innovation, and now it is coming into the crypto space.
Logarithmic Finance (LOG) is an early-stage protocol that allows easy access to investing in multiple presale coins and being able to hold them in one consolidated place through linking your DeFi wallet.
Logarithmic Finance, which is currently in its presale, allows users to purchase coins of the best start-ups using LOG tokens via their layer-3 swapping platform.
The project is having an extremely strong presale and is expected to be one of the best-performing tokens as interest in investing in early projects continues to rise.
Lastly, the tokenomics of LOG make it an extremely sound investment to buy and hold, due to a fixed supply and burning of tokens upon swapping for presale coins. This makes LOG a deflationary asset and an excellent hedge against the wider market.
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